NEW YORK (MainStreet) – Here’s a lesson I learned the hard way: You can still be hit with an overdraft fee even after you’ve opted out of overdraft protection if you’ve linked recurring debit card charges, such as a monthly bill or a magazine subscription, to your checking account. 

I learned of this policy recently when Wells Fargo hit me with a $35 fee after covering my $11 gym membership to Planet Fitness, which was linked to a debit card account I am in the process of closing (hence, the lack of funds).

This practice is, unfortunately, perfectly legal. Legislation introduced back in 2010 that requires financial institutions to make you opt in to overdraft protection pertains only to ATM and one-time debit card transactions that are covered by the bank when there are insufficient funds in your account. It doesn’t apply to recurring debit card charges or what would have otherwise been a bounced check.

Major banks all handle this caveat differently. Wells Fargo and Chase both make it clear on their website that they may process recurring debit card charges and checks when funds are low, even if a customer doesn’t have overdraft protection.

The policy at Bank of America, which eliminated overdraft at the point of sale in 2010, is a bit more complicated because customers can elect to have different overdraft settings on their account. Those who select its “Decline All” setting will have their recurring debit card charges declined, without being charged a returned item fee. Online banking bill pay or other electronic transactions tied to that checking account, however, will typically be declined at the expense of a $35 returned item fee. In any case, it’s a good idea to check specifically with your bank to understand exactly when an overdraft fee will be imposed.

It will be interesting to see if the Consumer Financial Protection Bureau introduces new legislation that allows consumers to opt out of overdraft protection entirely when it completes its inquiry into overdraft fees later this year.

I know I certainly would have preferred it if my bank declined the transaction and left me to deal with Planet Fitness on my own, though I suppose other customers may prefer to have checks for certain monthly bills, like mortgage payments or utilities, be covered by their bank when funds are low. The point is, it would be nice to have the choice.

In the meantime, the caveat further supports the notion that certain automatic monthly payments, particularly cellphone bills and gym memberships, should be linked to a credit card, where a cardholder can not only avoid high overdraft fees, but earn rewards on the purchases.

Which items should you always be charging? Find out in MainStreet’s roundup of 10 Things You Should Always Buy With Your Credit Card!

—Jeanine Skowronski is staff reporter for MainStreet. You can reach her by email at, or follow her on Twitter at @JeanineSko.