Huntington offers new overdraft grace period

Jinae West

Huntington Bank recently unveiled a new policy, the first of its kind for a major

national bank, that grants customers a 24-hour grace period on checking overdraft


To alert customers of overdrafts, Huntington sends them both text and e-mail

messages. Customers then have one business day to deposit money without penalty.

Consumer checking accounts are automatically enrolled in the protection service.

Dave Schamer, Huntington director of deposits, confirmed the bank will lose

approximately $24 million in revenue because of this policy and a second plan

that waives overdrawn balances less than $5, but it hopes to make it up in deposit

volume and market shares over the next several years.

The grace period, which came into effect Sept. 20, comes at a time when many banks are looking for ways to appeal to consumers. In August, a federal law was implemented that prohibits banks from charging fees when customers overdraw their accounts through ATMs and everyday debit card purchases, unless they agree in advance to pay the charge.

Schamer, who helped develop the policy, said when most people make a mistake, they know they’ve made it. What customers don’t like, he said, is when the mistake is a simple timing issue, such as clearing a check, and they’re penalized.

“I think (the 24-hour grace period) is a differentiator for our brand,” he said.

William Shivers, Huntington president of the Akron-Canton region, echoed a similar sentiment, saying the policy is a way to give back to consumers.

Most other banks offer some kind of overdraft protection. FirstMerit waives one overdraft fee a year, and Chase and Fifth Third alert customers by text message if their accounts fall below a certain amount. Other banks, such as PNC, waive fees if the overdrawn amount is less than $5. For U.S. Bank, the fee is waived for overdrawn balances less than $10.

Rick Coe, CEO of Portage Community Bank, said Huntington’s one-day policy is

conceptually “outstanding,” but said his bank has been doing it since PCB opened its

doors more than 12 years ago.

“And we technically don’t have a limit of 24 hours,” he said.

As a small community bank, Coe said PCB makes decisions about overdraft charges

manually, meaning the bank considers each charge on a case-by-case basis. He said if a consumer overdraws his or her account but has a responsible fiscal history at

the bank, the charge will most likely be waived. Coe said the overdraft limit per

customer is three.

David Dumpe, Kent State assistant finance professor, said the 24-hour grace period

is a nice accommodation for customers, but it could be abused. He said if people

repeatedly overdraw their accounts, the bank should be able to collect those fees.

Under Huntington’s program, the number of overdrafts per person is unlimited;

however, Schamer said risk measurement systems determine how much can be


Contact Jinae West [email protected].