An overnight overdraft is a negative
balance in a Federal Reserve account at the close of the business
day.
92 The Board expects institutions
to avoid overnight overdrafts.
To minimize the Reserve Banks’ exposure to overnight overdrafts,
which are not always collateralized, the Board authorizes Reserve
Banks to discourage depository institutions from incurring overnight
overdrafts by charging a penalty fee. Institutions that do not extinguish
their daylight overdrafts and incur overnight overdrafts are subject
to ex post counseling in addition to a penalty fee.
The Board establishes the following
penalty rate structure for overnight overdrafts:
1. An overnight overdraft penalty rate
of the primary credit rate plus 4 percentage points (annual rate).
2. A minimum penalty
fee of 100 dollars, regardless of the amount of the overnight overdraft.
The minimum fee is administered per each occasion.
3. A charge for each calendar day (including
weekends and holidays) that an overnight overdraft is outstanding.
