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Conference 7.286::dcu

Title:	DCU
Notice:	1996 BoD Election results in 1004
Moderator:	CPEEDY::BRADLEY

Created:	Sat Feb 07 1987
Last Modified:	Fri Jun 06 1997
Last Successful Update:	Fri Jun 06 1997
Number of topics:	1041
Total number of notes:	18759

1001.0. "must use regular savings acct for overdraft protection" by CSCMA::BALICH () Mon Jul 08 1996 15:26

    
    I got a question ...
    
    
    
    I currently have OVERDRAFT protection on my checking account ... I
    currently have money coming out of the basic savings account if I 
    need it.
    
    I am now thinking about switching to MONEY MARKET account for my
    main savings account.
    
    DCU says that I can't use the money market account for overdraft
    protection to my checking ?  Does anybody know why ???  Doesn't make
    sense since this is just a savings account.
    
    They say I must use my regular savings account or use my overdraft
    protection of $500.00.  I prefer to use my MM savings account to 
    avoid finance charges.
    
    Thanks!

T.R	Title	User	Personal Name	Date	Lines
1001.1	Federal regulation, I think	49234::DAVIS		`Mon Jul 08 1996 16:29`	5
	My guess is that it's because of Regulation D, or whatever the right one is. That is, the Feds put a limit on the number of withdrawals per month from that kind of account. - S.
1001.2		STRWRS::KOCH_P	It never hurts to ask...	`Mon Jul 08 1996 17:53`	4
	Even so, you are allowed 6 transfers per month. So, as long as I don't violate that rule, what is the actual part of the regulation which won't allow this?
1001.3		MOLAR::DELBALSO	I (spade) my (dogface)	`Tue Jul 09 1996 02:21`	9
	6? I thought it was 4. In any event, I can see the rationale for disallowing the automatic overdraft protection from such an acct. How is anyone to know how many times within a month you may need to use it? The DEFCU can't be left holding the bag if you reach the limit. Do you want to run the risk of a bounced check charge in the event that you do? Sounds like the right control to me.
1001.4		STRWRS::KOCH_P	It never hurts to ask...	`Tue Jul 09 1996 12:40`	6
	No, I disagree. Why would the DEFCU be left holding the bag? If I don't have enough money in my checking account, I'm over my transfer limit of 6, my checks bounce or my payments aren't made. Your argument does nothing to sway my opinion.
1001.5	You just want a checking account that pays high interest....	19872::GORDON	Approaching a DECade...	`Tue Jul 09 1996 13:47`	25
	In order to get the higher interest rate of the money market account, there are a number of restrictions. For example, I believe the account is currently restricted to 3 withdrawals a month. If the money market were no different than a regular savings account, why have two different accounts? If you don't like the restrictions, don't put your money in the account. I also have my own opinions about overdraft protection. All my life I've been a lousy record keeper w.r.t my checking account and have never bounced a check. (I will admit that since I started using Quicken last year, I'm much better than I used to be.) I think overdraft protection should be restricted. Not that there aren't times when you should take advantage of presented opportunities... My father used to work for a bank and around the time they first started offering "reserve lines of credit" [in other words, overdraft loans] the interest rate on the overdraft was significantly less than car loans at the time. Dad wrote a check for his next car... (My father also doesn't believe in chattel mortgages for anything less than a house [and would probably avoid those if he could] and the overdraft is essentially an unsecured personal loan.) Shortly after that, the bank wised up and raised the rates... --Doug
1001.6		MOLAR::DELBALSO	I (spade) my (dogface)	`Tue Jul 09 1996 14:10`	15
	> If I don't > have enough money in my checking account, I'm over my transfer limit of > 6, my checks bounce or my payments aren't made. ??? Isn't that what I said in the last sentence of the first paragraph of .3? > Your argument does nothing to sway my opinion. I wasn't trying to sway your opinion. The fact remains that it makes no sense for the DCU to grant overdraft protection from an account which by definition has a limited number of automatic transactions. That's what's known as "asking for trouble", and it's largely for your own good that it's done.
1001.7		12368::"gillett@zk3.dec.com"	Christopher Gillett	`Tue Jul 09 1996 19:18`	31
	There are a couple of answers to the question in .0: The reason that DCU currently does not support overdrafting from the Money Market account is due to limitations in existing data processing systems. The longer part of this answer is fairly technical from the perspective of how DCU's internal DP system work, and how account numbers and suffixes map together. A secondary consideration is for Reg D limitations as has been hinted at by some of the replies, but this is not considered a major issue. The reason that this restriction exists at all is somewhat philosophical. The purpose of the money market account is as a savings vehicle more than a transaction vehicle. Because of this philosophy, management chose to designate the savings account as the overdraft account. The idea is that because of the restrictions on the money market account, management has more flexibility in how the money is invested (with respect to duration, the higher yields obtained by longer term investments, and the credit union's need for liquidity). Because of this flexibility, DCU is able to offer higher rates on these accounts, which is something that we (BoD and mgmt) believe the membership wants. With all that said, there is interest from management in reviewing how overdraft account designation is handled. I've passed along the essence of the comments in the base note to the operations folks for their review. Hope this helps... Chris [Posted by WWW Notes gateway]