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Overdrafts and Bounce Protection

How Flagstar customers with Bounce Protection can avoid unpaid items and unexpected fees. 

Peace of mind designed around the way you bank

In a fast-paced world, even the most organized person can find themselves facing a transaction that is declined or an unexpected withdrawal that puts their account out of balance.1 At Flagstar, we understand that life gets hectic sometimes, so this page features the information you need to control what happens next.

First, let’s talk about preventing overdraft and NSF transactions entirely

Tips for keeping your balance above $0:

  • Track your withdrawals and deposits 24/7/365 with online and mobile banking.2
  • Set up notifications and alerts in online or mobile banking to keep up with deposits, withdrawals, and whatever information is important to you.
  • Pay special attention to delayed charges like gas, hotels, restaurant tips, and rental cars. It often takes a few days for the final amount to go through.

Understanding the difference between overdraft and NSF transactions

If a transaction reaches your checking account but there aren’t enough available funds to cover it, what happens? The item can be returned unpaid as a non-sufficient funds (NSF) transaction or paid as an overdraft transaction.1 Here’s how it works:

  • Non-sufficient funds (NSF) transaction – Flagstar declines the transaction and does not pay it, so it's returned unpaid. We will not charge an NSF fee, but the person or business you were trying to pay may charge a late fee or returned payment fee.
  • Overdraft transaction – The transaction goes through, and the item is paid. 

You can add overdraft protection to your account—or not

Choose any or all of the options below, or contact our
talented bankers to help you decide.

Fees associated with overdraft protection include:

  • $0 when using linked accounts
  • $0 if a transaction is declined or returned unpaid
  • $10 when a transaction is paid using Bounce Protection, with a maximum of three fees ($30 total) per day

DIY

Skip overdraft protection entirely and monitor your account yourself using online, mobile, and telephone banking. This option is best for customers who want flexibility but not fees.

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Avoid overdrafts by tracking recent and pending deposits with online, mobile, or telephone banking.

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You can also make a deposit to bring your Available Balance to $0 or more by 4 p.m. ET the next business day. 3

Linked Flagstar accounts4

You can link your checking account to a Flagstar savings, money market, or checking account. If your checking account doesn’t have enough funds to cover a transaction presented for payment, we’ll automatically move funds from the linked account to make up the difference.

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The transaction goes through (if the linked account can cover it).

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You’ll pay no fees, assuming the linked account can cover the transaction. (Whew!)

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It’s convenient, but a reduced balance in your linked account could earn less interest.

Overdraft line of credit (ODLOC)5

You can apply for a line of credit made specifically for overdrafts. If approved, your ODLOC will kick in if your account doesn’t have enough funds to cover a transaction.

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The transaction goes through (up to your credit limit).

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You’ll pay no fees if the ODLOC can cover the transaction. (Whew!)

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However, you will pay interest on the ODLOC.

Bounce Protection6,7

Bounce Protection is no longer available to opt into. But if you already have Bounce Protection, you can still rely on it to cover transactions up to your Bounce Protection limit. 

Bounce Protection applies to checks, recurring debit card payments, electronic payments using bill pay, transfers, and teller withdrawals. If you've also enrolled in ATM & Debit Card Overdraft Protection, your coverage extends to ATM withdrawals and one-time debit card transactions. 

 

Here’s how Bounce works: 

  • Items will post to your account as we receive them.
  • You can see the amount of each item deducted from your Available Balance in online or mobile banking.
  • Items of $10 or less will not be assessed an overdraft fee. 
  • You will have until 9 p.m. ET to bring your account to a positive Available Balance to avoid a fee.8
  • If an item is more than your Available Balance but within your Bounce limit, we may pay it and charge you a $10 fee, up to three fees per day ($30 total).
  • If multiple items exceed your Bounce Protection limit on the same business day, we may, at our discretion, pay them the next day based on your Available Balance at that time.

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The transaction goes through up to your Bounce Protection limit: $500 for non-interest-bearing accounts and $1,000 for interest-bearing accounts.

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You’ll pay a $10 overdraft fee, up to three per day ($30 total).

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If you have Debit Card Overdraft Protection9, too, your ATM withdrawals, everyday purchases, and other one-time debit card transactions are covered up to your Bounce Protection limit.

You can also layer different types of overdraft protection

For the ultimate coverage, you can add all three overdraft protection services to your account. Simply tell us whether to use your linked account(s) or overdraft line of credit first in the event of an overdraft.10 Bounce Protection is always in the last position.

Which option should be first? The answer depends on your spending habits and the amount of money in your linked account. For example, if your linked account has a large balance, consider putting it first to avoid paying interest on your overdraft line of credit. On the other hand, if you are still building a nest egg, you may want the overdraft line of credit to be first. Still not sure? Our experienced bankers can help you decide what’s right for you.

Compare overdraft protection services for personal checking

  Linked Account(s) Overdraft Line of Credit Bounce Protection
How much overdraft protection does this option provide?

Up to the total Available Balance of the linked account(s) $500 - $10,000 based on credit approval

Up to $500  for non-interest-bearing accounts

Up to $1,000 for interest-bearing accounts

How much does it cost to cover an overdraft? $0 Interest begins to accrue immediately. $10 fee per item up to a maximum of 3 items per day ($30)
When can I add this option to a new account? Immediately 0-10 days after account opening5 No longer available for new clients
If I sign up for both services, in what order will they cover an overdraft? Your choice: 1st or 2nd

Your choice: 1st or 2nd

3rd

1Your account is overdrawn when your Available Balance is less than zero. If we pay an Item which exceeds your Available Balance, the transaction will be considered an overdraft transaction, and your account will be considered overdrawn. If an Item exceeding your Available Balance is presented for payment and we return the Item unpaid, the transaction would be considered a non-sufficient funds transaction.

2Not all devices supported. Available for eligible personal and business checking and savings account customers only. CD customers may view their balance and account activity only. Must be an active personal online banking user.

3To be a qualifying overdraft deposit, the deposit must be: (1) of funds with same-day availability under our funds availability disclosure; (2) in an amount set forth in the next paragraph; (3) made to the overdrawn account; and (4) if the deposit will include cash or check, made at any of our branches up to the daily closing time of the branch on that business day, or at a full-service ATM located on the premises of one of our branches by 4 p.m. ET the next business day. A full-service ATM is an ATM that accepts deposits in addition to dispensing cash. If items exceeding your available balance were paid, the qualifying overdraft deposit must be in an amount that, when all debits and credits to your account for that business day have been posted, results in your available balance being at least $0. A deposit made after 4 p.m. ET on the next business day or made on a day that is not a business day is deemed to be made on the following business day.

4Linked account means another account on which you are an owner, such as a savings, money market, or checking account, which you requested we link to your checking account for overdraft protection purposes. If your linked account earns interest, you should decide whether the amount of overdraft charges on your checking account you anticipate you will avoid under the linked account arrangement will be greater than the amount of interest you will forgo by having funds transferred from the linked account. You may request our Truth-in-Savings Disclosures for the type of account you propose to use as a linked account. It offers information regarding how interest is determined on the linked account and any minimum balance or other requirements to earn interest on the linked account.

5Overdraft line of credit: Credit approval and income verification required. Annual percentage rate (APR) for an overdraft line of credit (ODLOC) is 18%. ODLOC amount varies by your credit score and other factors. Customers with a Flagstar Bank account relationship of 60 days or less are only eligible for up to $3,000. See your current consumer overdraft line of credit account disclosure agreement for details and more information about the interest rate. Borrower must reside in the states of CA,IN, MI or WI.

6Bounce Protection: We will assess an overdraft charge of $10 to your account for each item we pay exceeding the available balance in your account. We may assess more than one overdraft charge to your account each day, depending on the number of checks and other items presented on your account that day, subject to the small amounts exception and qualifying overdraft deposit exception. However, we will not charge you more than three overdraft charges charges per day. We will not charge you an overdraft charge a) on any item presented for payment in the amount of $10 or less or b) if your account is overdrawn $10 or less after we finish the process of posting all debits and credits to your account on a business day. We do not assess overdraft charges until after 9 p.m. ET on each business day, which allows us to complete the process of posting all debits and credits received by 9 p.m. ET. This is important to you because it allows you to avoid an overdraft charge or non-sufficient funds transaction by making a qualifying overdraft deposit (defined above) by 9 p.m. ET on the same business day. We will pay the item only if your account is in good standing. We will not pay items that would cause the overdraft in your account to exceed your Bounce Protection limit. Your account is in good standing for purposes of Bounce Protection if you (1) deposit enough money to bring your account to a positive balance (including the payment of all bank fees and charges) at least once every 30 consecutive days by the end of the business day and the balance must remain positive until the next business day; (2) avoid excessive overdrafts; and (3) have no legal orders, levies or liens against your account. You should make every attempt to bring your account to a positive balance as soon as possible after an overdraft occurs. If we have not demanded immediate payment, you must bring your account to a positive balance (including the payment of all bank fees and charges) at least once every 30 consecutive days by the end of the business day and the balance must remain positive until the next business day. If you do not do so, we will notify you that your Bounce Protection has been suspended and that future items exceeding your available balance will be returned unpaid. Unless we notify you otherwise or you request that Bounce Protection be removed from your account, Bounce Protection will be reinstated on your account on the first business day after you bring your account to a positive end-of-business-day balance and the balance remains positive until the next business day. If your balance has been negative in any amount for 60 consecutive days, on the first business day after that we will close your account. "Item" means any order, instruction or authorization to pay, transfer or withdraw funds or money from your account including, but not limited to, checks, substitute checks, preauthorized drafts, withdrawal tickets, transfers, electronic debits, imaged debits, wire transfers, ATM debits, ACH debits, bill pay debits, photocopy debits, bank generated debits, and debit card point of sale transactions. There is a 60-day qualification period for new DDA accounts. During that time the account must have total deposits greater than or equal to the Bounce Limit for the applicable product type.

7Bounce Protection is limited to payment of paper checks and other transactions made using your account number (such as teller withdrawals, automatic ACH bill payments, and recurring debit card payments). We are not obligated to pay any item presented for payment that would cause your account to be overdrawn.

8To be a qualifying overdraft deposit, the deposit must be: (1) of funds with same-day availability under our funds availability disclosure; (2) in an amount set forth in the next paragraph; (3) made to the overdrawn account; and (4) if the deposit will include cash or check, made at any of our branches up to the daily closing time of the branch on that business day, or at a full-service ATM located on the premises of one of our branches by 9 p.m. ET. A full-service ATM is an ATM that accepts deposits in addition to dispensing cash. If items exceeding your available balance were paid, the qualifying overdraft deposit must be in an amount that, when all debits and credits to your account for that business day have been posted, results in your available balance being overdrawn by no more than $10. A deposit made after 9 p.m. ET on a business day or made on a day that is not a business day is deemed to be made on our next business day.

9Everyday (nonrecurring) debit card purchases and ATM transfers or withdrawals that overdraw your account may be paid using Bounce Protection if you have chosen to also enroll in ATM and Debit Card Overdraft Protection or if your account is a business account. An overdraft charge will be assessed in each of these situations. We are not obligated to pay any Item presented for payment that would cause your account to be overdrawn.

10You may instruct us whether you want us to transfer from any Linked Account(s) or overdraft line of credit in a certain order. Otherwise, we will transfer from a Linked Account or overdraft line of credit in the order it was associated with your account.

This information is subject to change. See the complete Disclosure Guide for further information.