Starting July 1st, banks will need customer consent to offer the “overdraft protection” that can cause a damaging domino affect on your bank account. You may be familiar with the exorbitant overdraft fees on ATM and debit card transactions that banks charge when you are trying to buy something that may go over the limit on your account.
It’s been a common practice – slapping customers with a $35- $40 fee for overdrawing their accounts, even by $1. And maybe a check was deposited the same day, but the bank processes your overdraft first!
To stop this usurious practice, new Federal Reserve rules require banks to notify customers of their overdraft services and give customers the option of being covered. Unless a consumer opts in, their transactions will be denied if they overdraw their accounts.
The Associated Press reports that banks earn as much as $25 billion to $38 billion annually from overdraft fees, including check overdrafts.
Overdrafts fees for checks and electronic payments are not prohibited by the new rules.
Filed under: News, Personal Finance Tagged: | ATM fees, ATM transaction fees, debit card fees, debit card transaction fees, new federal rules for overdrafts, overdraft fee reform, overdraft fees, overdraft protection, overdraft services
