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Important Information About Overdrafts



What is an overdraft? 

An overdraft occurs when a debit transaction (or multiple transactions) posted against a deposit account exceeds the account balance.  This can happen in several ways:

  • Writing a check;
  • Authorizing an automatic payment from the checking account to pay for recurring expenses such as utility bills, mortgage payments, gym memberships, etc.;
  • Paying for purchases with a debit card;
  • Making withdrawals from an automated teller machine (ATM).

What happens when an overdraft occurs? 

Any item posted as a debit to your account can result in an overdraft, and all such items are treated the same with regard to the actions described in this document.  In other words, overdraft actions and charges do not apply only to paper checks but to all debit transactions.

We may, at our discretion, honor transactions that overdraw your account, or we may decide to return the items to the payee.  In either case, you will be charged an Overdraft Fee or Returned Item Fee of $37.00 for each item.  Even if we do decide to pay an overdraft item, we are not obligated to pay overdrafts that occur at a later date.  The payment of overdrafts is never guaranteed.

What is an Overdraft Fee?

An Overdraft Fee of $37.00 will be charged when a debit transaction posted against a deposit account exceeds the account balance and we choose to honor the transaction and allow it to post to your account.

What is a Returned Item Fee?

A Returned Item Fee of $37.00 will be charged when a debit transaction posted against a deposit account exceeds the account balance and we choose to return the item to the payee.

If our final decision on the item(s) caused your account to become overdrawn, you should make a deposit as soon as possible to bring your account to a positive balance.

If your account balance remains negative for 45 days, we may close your account and it will be reported to a consumer reporting agency.  These actions may disrupt your ability to obtain a deposit account at another financial institution, and they may damage your credit rating.

What is an Overdrawn Balance Fee?

If, on any day, your account is overdrawn, you will be charged an Overdrawn Balance Fee equal to the overdrawn amount multiplied by a daily periodic rate of 00.02191.

De minimis Transactions: 

If your transaction creates an overdraft of less than $5.00, we will not charge a fee for the item.  Additionally, if any individual overdraft transaction is less than $5.00, we will not charge a fee for the item.

Daily Aggregate Fee Limits: 

When we pay or return an item that overdraws your account, we will not assess more than five Overdraft Fees/Returned Item Fees in a single business day.

Payment Order of Items: 

Transactions may not be posted in the order in which you made them due to the processing timelines of the Federal Reserve System and other delays which occur in the ordinary course of business.  The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented.  Some financial institutions post the largest dollar amounts first under the assumption that larger dollar transactions may be more important (such as mortgage or rent payments); however, this strategy can result in higher fees.  Other institutions pay the lowest dollar transactions first to minimize the fees assessed to the account.  While there is no payment order policy that is favorable in every instance, our policy is to pay your items by serial number.  We will pay debit card transactions first, ACH transactions second, and checks last for those items that post to your account on an individual day.  Checks will post by serial number within transaction code.

Balance Inquiries and Account Reconciliation: 

When you check your account balance, there may be outstanding items that have not yet posted due to processing delays which occur in the ordinary course of business.  If you do not reconcile your account balance on a periodic basis and have a good understanding of the approximate balance you should have, you may inadvertently overdraw your account if you rely solely on balance inquiries from the ATM or a bank teller.  We encourage you to make careful records and practice good account management.  This will help you to avoid writing checks or making other payments without sufficient funds and incurring the resulting fees.

Less Costly Options: 

In addition to our discretionary overdraft program, we also offer other options which can be less costly than Overdraft Fees and Returned Item Fees:

  • Overdraft Line of Credit – This is a revolving credit product that automatically transfers money to your checking account when you overdraw, subject to your credit limit.  You must apply and meet credit eligibility requirements.  An annual fee is charged, and interest will accrue on the outstanding balance of the line of credit.  A fee will be charged for each transfer.  
  • Linked Savings Account – A First State Bank savings account is linked to your checking account.  When you overdraw your checking account, we automatically transfer money from your savings account to cover the overdraft, subject to the savings account balance.  Monthly maximum transaction limitations apply, and a fee will be charged for each transfer.

To discuss other options regarding your deposit account management, call 601-735-3124 during business hours or come in to one of our conveniently located branches.

Financial Education and Counseling: 

If you are facing financial challenges and unable to manage your account effectively, you may want to consider accessing free or low-cost financial education workshops or individualized financial counseling.  Visit the Federal Trade Commission’s website for more information at  You may also want to contact the National Foundation for Credit Counseling at 800.388.2227.