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Discretionary Overdraft Program (DOP) Disclosures

An overdraft occurs when the available balance in your account is not enough to cover the item presented for payment. With the resources Smart Financial has available, you can guard against returned checks and debit card declination with three transfer options.

Available Balance

If we do not cover your overdraft through a Savings Transfer, and you do not have a Checking Line of Credit, we may cover your overdraft through DOP, if you are qualified and have opted into the DOP. To determine whether a transaction may cause an overdraft, it is important to understand that your checking account has two kinds of balances: the current balance and the available balance. The current balance is calculated after all transactions described below have posted to your account after the end of the business day.

The available balance indicates the amount of funds available for withdrawal or use at that moment. The available balance includes pending transactions that have been authorized but may not yet have posted, but does not include items such as scheduled Bill Pay transactions, deposits with holds placed, and checks that you have written but that have not yet cleared your account.

Overdraft Protection Options:

1. Savings Account

  • There are no interest charges, unlike a line of credit or credit card.
  • The limit for your overdraft coverage is as large as your Savings balance.
  • You can review transactions via online banking, our Mobile App, or Smart Line (24-hour telephone banking).

Savings Transfers

If your checking account does not have sufficient funds to cover a check or ACH transaction, we will first attempt to pay the overdraft through your Savings Transfers from your linked savings account (your membership savings account), provided it has sufficient funds available, before using DOP. Through a Savings Transfers, we will only use funds from a linked savings account to pay a check or ACH overdraft transaction if there are sufficient funds available in the savings account to cover the full amount of the overdraft transaction. Savings Transfers are subject to a transfer/withdrawal limit of six per month. This transfer/ withdrawal limit includes transfers by Smart Financial to cover overdrafts, your pre-authorized transfer requests, and your requests for transfers and withdrawals by telephone (including Smart Line Telephone Service), through Virtual Branch (online banking), or through the Smart Financial.

Mobile App. A small fee may be assessed for overdraft transfers made from your savings account.

2. Overdraft Line of Credit

ALine of Credit has limits based upon your credit qualifications. It protects your checking account from overdrafts and embarrassing NSF notices and fees. This option will also allow you to use your Debit Card for purchases without fees and without being declined. The Line of Credit is a smart addition to any checking account so you can write yourself a small loan or cover expenses during an emergency. A Line of Credit may also prove to be less expensive than our fee-based overdraft options. This option will require a credit approval.

3. Discretionary Overdraft Program

Under the Discretionary Overdraft Program (DOP), we may pay checks, (POS) Debit Card transactions, Automated Teller Machine (ATM) withdrawals, and Automated Clearing House (ACH) transactions presented against your account when there is not enough available balance in your account to cover the transactions. To qualify for this service, you must be a member, in good standing, for at least 60 days with sufficient deposits in the last 30 days equal to the overdraft limit ($700), be at least 18 years of age, and have a qualified checking account. This service is not available on all accounts offered by Smart Financial. Members may only have one account enrolled in DOP.

Standard Practices and Fees Associated with DOP

  1. We will charge a $30 DOP fee each time we pay an overdraft.
  2. You will not be charged for debit card transactions under $10 that overdraw your account.
  3. DOP is limited to $700. Your account may be overdrawn more than the limit due to overdraft fees, returned deposited item fees, or any other service charge listed in the Fee Schedule.

Choosing the option of the DOP does not mean we will pay overdrafts. Smart Financial Credit Union pays overdraft items at our discretion. If we do not authorize to pay an overdraft, your transaction will be declined or returned, unpaid.

When you use your Smart Financial Debit Card to make a purchase, a temporary hold is placed on your account for the transaction on the day of the transaction. This hold will be removed when the transaction posts to the account or after twenty-four hours, whichever comes first. In some cases, the hold may exceed or be less than the amount of the transaction. For example, gas station, restaurant, and rental car transactions are commonly posted for an amount different from the initial hold. When the hold is removed, the funds will be added to the available balance in your account. If your account is overdrawn after the hold is released and the transaction posts, a DOP fee may be assessed.

The federal government has made changes to Regulation E, which now requires Smart Financial to get your permission to complete ATM and debit card transaction that would result in an overdraft to your account. If you have not opted in, your transaction will be declined if the available balance in your account is less than the transaction amount. If you have opted in and have enough overdraft available, your transaction will clear with a $30 privilege fee. By choosing to opt in to the DOP for debit card, you understand that you may pay overdraft fees for those purchases if the transaction overdraws your account.

The following is one example that illustrates how overdraft fees are assessed on an account that opted in to the DOP for ATM and debit card transactions:

Your current and available balances are both $100, and you use your debit card to make a $70 purchase online. A hold for $70 is placed on your account once the purchase is authorized, which reduces your available balance to $30 while your current balance remains at $100. Before the merchant sends the charge to us for processing, you withdraw $60 from an ATM. Your available balance is now negative $30, while your current balance remains at $100.

After the close of the business day when all transactions are processed, the ATM cash withdrawal will post, followed by the POS debit transaction (online purchase), and a revised current balance is calculated. Now, you may be assessed a $30 fee for the payment of the POS debit transaction. This fee may be deducted from your account, which leaves your account overdrawn by $60. This example further demonstrates the necessity to manage your available balance. Using one of the free online services offered by Smart Financial could assist in account management enabling you to avoid overdraft fees.

If your checking account goes into an overdrawn status (including DOP fees) and funds are available in your savings account, we may transfer all or some of the funds from the savings account to the checking account to reduce or eliminate the overdrawn amount, as this is our right of offset to cover a negative balance in an account.

How to Avoid Fees

  1. A single larger overdraft will result in just one fee, as opposed to multiple smaller overdrafts.
  2. Good account management is the best way to avoid overdrafts.
  3. Electronic banking services at smartcu.org and using our apps on your mobile device can to keep track of your available balance.

Restriction of DOP Privileges

The DOP is not a loan or a line of credit and must be repaid promptly. If your account remains overdrawn for 30 consecutive days, the service will be deactivated until the account is brought positive. It will take 48 hours for the service to reactivate after the account is positive. If you have a loan with Smart Financial that is delinquent, the DOP service will deactivate until the loan is made current. If your account remains overdrawn for 60 consecutive days, the account will be charged off and your membership may be revoked.

Smart Financial may revoke the DOP service on your account at any time without notice. We reserve the right to deny payment of transactions at any time.

Canceling Your Enrollment in the DOP

You have the right to revoke your consent by opting out of the DOP at any time by contacting our Member Services line at 80-392-5084 or by visiting a branch near you. You may revoke consent by mail: P.O. Box 920719 Houston, Texas 77292.