New Federal Rules on Bank Overdraft Fees Coming

The Federal Reserve Board announced that beginning in the summer of 2010 consumers will not be liable for overdraft fees on checking accounts, ATM withdrawals and debit card transactions unless they specifically opt-in to the overdraft protection program offered by their financial institution.

Overdraft fees have become a very lucrative business for U.S. banks. It is estimated that they will rake in an astounding $38 billion on overdraft fees alone in 2009. As it stands now, the majority of banks automatically enroll their customers in their respective overdraft protection programs whether they request it or not.

While the banks will say that it is a service that they offer for their customers to protect them, many of these very same consumers and consumer advocate groups have vehemently argued otherwise.

A great many of the fees would have been prevented if but a simple warning were given that the consumer was in fact short on funds to cover their transaction. After all, who wants to pay a $35 penalty for buying a $3 cup of coffee?

To make things worse, overdraft fees were charged continuously throughout the day to the tune of hundreds of dollars on many unsuspecting account holders. Many times the fees were exponentially greater than the actual transaction itself.

That’s when the situation pretty much hit its breaking point. Consumers became so outraged that legislators eventually got involved. The financial institutions will also be required to grant the very same terms, features and conditions to people that opt-out of having overdraft protection as the ones that opt-in for it.

Related Information:

1. Banks Reign in Overdraft Fees on Debit Cards A couple of weeks ago we discussed how banks were drawing the ire of their customers and the attention of legislators for charging excessive overdraft fees to their debit card...
2. $24 Billion In Overdraft Fees Last Year Alone Have you been charged overdraft fees lately on your checking account? The chances are pretty good that you probably have been based on the fact that more than 50 million...
3. Excessive Overdraft Fee Charges May Trigger Debit Card Reform The lousy economy has forced millions of Americans to turn away from lines of credit and credit cards. They have been increasingly using debit cards to pay for consumer goods...
4. New Credit Card Rules Go Into Effect This Month I dare say that not a lot of credit cardholders are aware of this but some new rules regarding their credit card accounts will go into effect this month. One...