Banks and credit unions are preparing for an unusual phenomenon — the midmonth payday on Sunday, Aug. 15, when millions of consumers may learn the hard way they were supposed to have opted-in for overdraft protection on their checking accounts.

"It's going to be a free-for-all," said Michael Moebs, the founder and principal of Moebs Services Inc., a Lake Bluff, Ill., company that provides overdraft and other consulting services to 2,000 credit unions and banks.

"You're going to have people whose accounts are not credited that weekend and they will not have overdraft protection."

Under the recent changes to the Federal Reserve Board's Regulation E — which implements the Electronic Funds Transfer Act — by July 1 all banks and credit unions must obtain permission from new members and customers to provide them with automatic overdraft protection on all nonrecurring debit card transactions and automated teller machine withdrawals.

By Aug. 15, the institutions must obtain opt-ins for all their existing customers.

Because the majority of wage earners get paid in the middle of the month, that means their credit union and bank accounts will not be credited with their pay until the following Monday, according to Moebs.

"We've been talking with the Fed about this, asking them to move this up to the Monday," he said.

"You're going to get people standing in line for groceries that weekend and they're going to get declined," the overdraft consultant said.

"It's going to be a nightmare."

So far, the Fed is sticking to the Sunday deadline.

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