An overdraft occurs when (a) there is not enough money in the Available Balance in your checking account at the time a transaction is presented to SEFCU for payment or authorization OR (b) there is not enough money in the Current Balance in your checking account at the time a transaction is “posted” to your account, but in either case SEFCU pays the transaction anyway.
As stated above, your checking account has two kinds of balances: the Current Balance and the Available Balance. Both can be checked when you review your account online, at an ATM, by phone, or at a branch. It is important to understand how the two balances work so that you know how much money is in your account at any given time. Here is an explanation of Current and Available Balances and how they work.
Your Current Balance is the full amount of all deposits to your account, even though some portion of a deposit may not be available to you or may be pending receipt of funds from a third party, minus payment transactions that have actually been presented to us for payment and have “posted” to your account. It does not, however, include preauthorized commitments to pay merchants that are pending settlement (i.e., have not yet been paid or posted to your account), nor all or portions of checks or other deposits that have not yet posted. Thus, while the term “current” may sound as though the amount you see is an up-to-date display of what is in your account that you can spend, that is not always the case.
Available Balance is defined as the amount of money in your account that is immediately available for use. It is the current balance minus holds placed on deposits and minus debit card payment commitments that have been authorized but that have not yet posted to your account, and other holds on funds, such as a garnishment.
SEFCU uses the Current Balance in your account at the time check and ACH transactions are presented/posted to determine when your account is overdrawn and when a fee will be assessed. SEFCU uses the Available Balance at the time debit card transactions are initiated to determine whether the transaction will be authorized and at the time the authorized transaction is posted to your account the Current Balance is used to determine whether there is an overdraft and whether a fee will be assessed.
The following example illustrates how this works:
Assume both your Current Balance and Available Balance are $100, and you swipe your debit card at a restaurant for $60. The restaurant may ask SEFCU to pre-authorize the payment. If it is authorized, then your Available Balance will be reduced by $60 so your Available Balance is only $40. Your Current Balance is still $100. Before the restaurant charge is sent to us for posting, a check that you wrote for $50 is presented and posted to your account. Because you have only $40 in your Available Balance (you have committed to pay the restaurant $60), your Available Balance will be reduced to $0. Your Current Balance was $100 before the check posted and is $50 after the check posts. In this case, we may pay the $50 check. When the $60 restaurant charge is presented and posted to your account, you will not have enough money in your Current Balance because of the intervening check, however SEFCU is obligated to pay it because it was authorized. In this case, SEFCU may charge an overdraft fee because your Current Balance is insufficient.
It is very important to understand that you may still overdraw your account even though the Available Balance and Current Balance appear to show there are sufficient funds to cover a transaction that you want to make. This is because your balances may not reflect all your outstanding checks and automatic bill payments that you have authorized, or other outstanding transactions that have not been paid from your account. In the example above, the outstanding check will not be reflected in your Available or Current Balances.
In addition, your Available Balance may not reflect all of your debit card transactions. For example, if a merchant obtains our prior authorization but does not submit a one-time debit card transaction for payment within three (3) business days of authorization (or for up to thirty (30) business days for certain types of debit card transactions), we must release the authorization hold on the transaction. The Available Balance will not reflect this transaction once the hold has been released until the transaction has been received by us and paid from your account.
SEFCU is not under any obligation to pay overdrafts, except debit card transactions that are authorized for payment. However, if you opt in to Premium Overdraft, we may at our discretion authorize debit card transactions when you do not have sufficient funds in the Available Balance of your checking account at the time your debit card is presented to a merchant for authorization. If the transaction is authorized, then we are required to pay it at the time it is posted to your account, which could be days later, regardless of the Current Balance at that time. When we pay overdraft items for you, you may be charged our normal Overdraft Fee as stated in the SEFCU Fee Schedule.