OD Charges for Service Charge

Posted By: Compliance Audit

OD Charges for Service Charge - 05/19/11 03:56 PM

If an account is overdrawn due only to a service charge posting to the account - the account balance was $0.00 when the service charge was assessed - can we charge our daily continuous OD fee?
Posted By: BSABecky

Re: OD Charges for Service Charge - 05/19/11 05:34 PM

I would say the service charge is something the client is aware of, so they should be leaving that amount in there monthly to cover it. Therefore, they should incur the OD fee. It's not the service charge that overdrew the account; it was the debit transaction prior to it. wink
Posted By: rlcarey

Re: OD Charges for Service Charge - 05/19/11 09:10 PM

If you are FDIC regulated, you probably want to be prepared to be cited for a UDAP violation unless service charges are specifically listed as the type of transaction that can cause an overdraft.
Posted By: John Burnett

Re: OD Charges for Service Charge - 05/20/11 03:15 PM

I agree with Randy. Also, if you're FDIC supervised and operate an automated OD payment program, each time you hit the account with an OD fee, including one triggered by another fee, is an "occasion" inexorably building toward that 6-in-12 threshold.