Bounced-check protection plans are a form of overdraft protection. You don't have to sign up for them; many banks automatically enroll just about all of their checking account customers. But they differ significantly from traditional overdraft protection where you sign up in advance and agree to have the overdraft paid with funds from a savings account or a credit card.

With bounced-check plans, if you bounce a check, you'll pay the bank's standard no sufficient funds fee and, in some cases, a daily fee on top of that. The bank decides how much overdraft protection you get -- maybe $100, maybe $500. Most plans don't go over $1,000. And there's no guarantee that the bank will pay your check.

Writing a check isn't the only way you can overdraw your account with these plans. You can overdraw it with your debit card at the ATM or at the cash register with a pre-authorized debit. You get a short amount of time to repay the overdraft, usually two weeks to one month. Your account can be closed if you don't repay on time.

The new rules require institutions that promote the payment of overdrafts in an advertisement to disclose the total amount of fees or charges in the customer's periodic statement.

The Fed also expressed concerns about misleading advertisements and outlines several examples of prohibited ads.

   Representing an overdraft service as a line of credit
   Representing that the institution will honor all checks, when the institution retains discretion to not honor them.
   Representing that consumers with an overdrawn account are allowed to maintain a negative balance when terms of the service require promptly paying the overdraft

Describing an overdraft service solely as protection against bounced checks when the bank permits overdrafts for a fee in connection with ATM withdrawals and other electronic fund transfers that permit consumers to overdraw their account

Source: Federal Reserve's Final Rule - Regulation DD

   Bank accounts related articles & information:
• 7 most common personal banking mistakes
• Savings Strategies
• Personal Banking Summary
• Bounced-check protection plans - new rule <--You are here
• Free checking account
• Checking account types
• ATM Fees