May 16--Linking a checking account to a credit card to provide a cushion in case of an overdraft is a time-honored tradition in consumer banking, but Chase is taking a new approach.
Starting Aug. 20, a Chase credit card can no longer be used to provide overdraft protection for a personal checking account. Only a Chase savings account can be linked to a personal checking account to provide that backup funding.
So what happens if Chase checking account holders overdraw their accounts and don't have a Chase savings account?
It means that Chase checking account holders might have more declined transactions and might incur insufficient funds and returned item fees.
Using money from a savings account instead of a credit card to cover overdrafts might seem more fiscally responsible because consumers are using money they already have. They aren't borrowing money, which, in turn, could help them avoid interest charges on money transferred from a credit card.
But some people on Twitter didn't seem that happy about the change.
"Hey @Chase customers, they are changing their overdraft protection. Time to change banks. Just giving a heads up. Savings account strong arm," @JoeMurray78 tweeted May 12.
Nor was @NYConsGirl happy: "Very disappointed in changes to checking overdraft protection ... It has been convenient to use my Chase credit card for overdraft ... It would have been better to only apply this to new customers and keep the ability to still use the card for existing customers."
Chase, Chicago's biggest bank, also said it will no longer charge a $10 fee to transfer the money.
It said most customers enrolled in overdraft protection already have their personal checking accounts linked to a savings account, and that, in a six-month period, the bank has seen only 1.5 percent of overdraft protections go to a credit card.
As large Chicago banks go, Chase appears to be in the minority.
Bank of America said it hasn't made any changes to its overdraft protection policy and still allows customers to link to another checking, savings or credit card account.
PNC, too, said it hasn't announced any recent changes to its overdraft policy, and allows people to link to a PNC savings account, PNC credit card, PNC personal line of credit, or a second PNC checking account.
Earlier this year, Chase reminded customers that it might not fix errors in the amount of money deposited in customers' accounts as long it's within $10 of the correct sum. It's up to the customer to flag problems, according to revisions to the language of the bank's deposit account agreement.
byerak@tribpub.com
