Fed Close to Ending Overdraft-Fee Traps on Debit Cards, ATM

Woman at ATMIn the coming months, financial institutions will start providing consumers with notices on overdraft services, primarily the choice to “opt-in” before you can be hit with overdraft fees for ATM and one-time debit card transactions.
If they don’t for new customers starting July 1, 2010, they will be in trouble with the Federal Reserve. The regulator and rule-making authority on protecting consumers from unreasonable bank fees is putting out the word through a new web page.
Banks, credit unions, and other financial institutions will be prohibited from charging overdraft fees for ATM and one-time debit card transactions, unless a customer consents. For existing customers, the institutions have until August 15 to comply.
The new rule virtually puts to an end what consumers and their advocacy groups have been complaining about for years – the practices of standard overdraft fees charged by banks — as much as $30 in most cases – each time a customer overdraws on an account. 
Banks also has made it a practice to put costumers in overdraft protection plans by offering a line of credit or a link to a savings account to cover transactions when one overdraws on an account. Banks typically charge a fee each time a customer overdraws in that case as well, although overdraft protection may be less expensive.
“Under the new rules, your bank must first get your permission to apply these services to everyday debit card and ATM transactions… To grant this permission, you will need to respond to the notice and opt in (agree),” the Fed states on its web page on the new overdraft rules.  
For existing accounts, banks must stop standard overdraft services beginning August 15, 2010 if a consumer doesn’t “opt-in.”
These transactions will be declined if there is not enough money in the customer’s accounts, and banks cannot charge fees.
The Fed also reminds bank customers that the new rules do not cover checks or automatic bill payments that you may have set up with your bank.
“If you do not want your bank’s standard overdraft services in these instances, talk to your bank; you may or may not have the option to cancel,” the Fed said.

2 thoughts on “Fed Close to Ending Overdraft-Fee Traps on Debit Cards, ATM

  • February 24, 2010 at 2:52 pm
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    Wow, did Bernanke really give the Banks until August 15th to comply on “existing” accounts?? Why allow existing accounts to be gouged another 6 weeks?? At least now we know for sure who’s side Bernanke’s on.

  • February 24, 2010 at 3:10 pm
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    Bernanke’s giving the banks until August 15 on “existing” accounts to comply with the new overdraft rules?? New accounts must be in compliance by July 1. Why allow existing accounts, which make up over 99% of all accounts I bet, to get ripped off for another 6 weeks?? I bet August 15 falls on a Saturday, and the following Monday is a national holiday. So what Bernanke really means is compliance by 11:59pm, August 18. Ladies and Gentlemen, your bought-and-paid-for Fed.

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