Organizations that maintain accounts with the Federal Reserve Banks are expected to monitor their account balances on an intraday basis to be aware of payment activity and help avoid overnight overdrafts. An overnight overdraft is a negative position in a Reserve Bank master account at the close of the business day.
The Federal Reserve Board of Governors expects institutions to avoid overnight overdrafts and adhere to account management expectations. Organizations that experience an overnight overdraft are subject to a penalty fee. We encourage you to review the resources below to help your organization monitor its account balance and manage liquidity needs.
1. Set up your access to the Account Management Information (AMI) application.
The AMI application allows you to view your institution’s account balance in near real-time at any time of the day. To prevent overnight overdrafts, we encourage you to check your account balance at the end of each business day.
2. Sign up for FedDetect Anomaly Notification for FedACH® Services.
The FedDetect Anomaly Notification for FedACH Services allows your organization to receive timely notifications on unusually high-dollar debits from Same Day ACH activity that may potentially cause an overdraft.
3. Establish access to the Discount Window.
The Discount Window (Off-site) is available to help organizations with liquidity challenges. Eligible institutions can establish access to the Discount Window by completing the necessary Operating Circular (OC) 10 agreements (Off-site). After access is established, organizations must have collateral pledged to secure Discount Window advances. Then, organizations may borrow funds through 7:00 p.m. ET on standard business days to prevent an overnight overdraft.
Preventing overnight overdrafts is a crucial part of your role as an account holder. Contact your relationship manager for more information on how to get started with the services above. We also encourage you to review the Federal Reserve’s Policy on Payment System Risk (Off-site), which provides additional information for account holders.
