Consumer Protection - Deposit Accounts
Deposit Accounts Basics
Consumers with deposits at FDIC-insured banks benefit from a wide range of consumer protections, depending on the type of deposit account, how they access their account, and related products. Perhaps the FDIC is most well-known for protecting consumers by insuring deposits. Specifically, the FDIC insures each depositor up to at least $250,000 at each FDIC-insured bank in the unlikely event of a bank failure. However, depositors benefit from other consumer protections as well. Below is some information on common consumer protections provided for certain deposit accounts, products, and services.
Consumer Protections Available
- Advertising deposit accounts vs. non-deposit products. Many consumers seek out FDIC-insured products because they are safe, conservative financial products. Because “FDIC” and “FDIC-insured” are valuable marketing tools, it is important that banks use these labels correctly to help consumers identify FDIC-insured products. Banks are allowed to use “FDIC” or “Member FDIC” or “FDIC-insured” when marketing an FDIC-insured product, like a certificate of deposit.
However, for financial products that are not FDIC-insured, such as investment or insurance products, bank advertisements do not include the FDIC logo. In addition, it should be clear to consumers that these products are not FDIC-insured and that consumers may lose principal.
- When deposits into a checking account become available. When funds are deposited into your checking account, there are rules and regulations that impact when you can access those funds. In general, funds are not immediately available but are available sooner if the deposit is cash, a cashier’s check, or a government check. It may take longer to access the funds if the deposit is a check from an out-of-state bank.
- Overdraft fees related to ATM or one-time debit card transactions. Many consumers overdraw their account by taking money out of an ATM or buying something with their debit card. But even if a bank allows you to overdraw your account in this way, the bank cannot charge you an overdraft fee without first getting your permission. In other words, you must “opt in” or agree to this charge ahead of time.
- Error resolution for an electronic fund transfers. Both banks and consumers have a responsibility to avoid and correct any account errors, like an unauthorized electronic transfer. It is important to review your account statements carefully and notify the bank immediately if you see a mistake. Also, notify your bank as soon as you realize you have lost your debit card. Here’s the benefit of keeping a close eye on your debit card and bank statements:
- Lost debit card. If you know your debit card is lost and you notify your bank within two days, your losses will be capped at $50. But if you notice your card is lost and you do not notify your bank in time, you may have to pay up to $500 in unauthorized charges.
- Bank Statements. If you notice a transfer of funds from your bank account that you (or another account owner) did not authorize, you are not responsible for the lost funds as long as you notify the bank of the error within 60 days of the bank sending you a statement. If you do not notify your bank in time, then your losses may not be limited.
- Deposit agreement. The Truth in Savings Act (TISA) and Regulation DD protect consumers by requiring banks to advise consumers about fees, interest rates, and other terms related to their deposit accounts. Consumers can use this information to shop around for the best account. Banks must provide consumers with this information when, for example, an account is opened, upon request, and when the terms of the account change.
- Savings Related Resources
- Joint Guidance on Overdraft Protection
- Overdraft Payment Programs and Consumer Protection
- Symbol of Confidence
- Youth Banking Resource Center
- FDIC study of overdrafts
- When a Bank Fails
- Search for Unclaimed Funds