Unexpected Bank Overdraft Fees To Be Eliminated
Consumers will get some relief under new federal laws that will go into effect next summer. Specifically, unexpected overdraft fees from ATM withdrawals and debit card purchases will be prohibited under new restrictions according to the Federal Reserve Board.
Up until now many banks have automatically enrolled their customers into overdraft protection plans without ever bothering to ask if they wanted the protection or not. Overdraft fees have in fact become very lucrative for banks and financial institutions.
It is estimated that in 2009 alone banks throughout the United States will reap $38 billion in overdraft fees from ATM withdrawals, debit cards and standard paper checks. No warnings were given that there were insufficient funds and it didn’t matter how much or how little the overdraft was for.
Now consumers will have to purposely opt-in to being covered by any institution’s overdraft protection plan. Furthermore, banks are also required to provide the very same services, terms and conditions as they do to those customers who opt-in to having overdraft protection.
Fees have become quite a hot topic amongst consumers and legislators as of late. Many consumer groups also have joined in contending that the fees were predatory in nature and took advantage of account holders.
Now when the new law goes into effect, if a consumer wants to use funds that are not available to them, they will immediately be informed that the transaction cannot go through due to insufficient funds.
As it is currently, even if the account holder is a few pennies over their available funds they are charged fees ranging anywhere from $15-$35 per transaction. Many people run up hundreds of dollars in penalty fees in a single day because they used their card several times without realizing that they were overdrawn.
The banks really took heat for that because they never gave their customers any warnings stating that there would in fact be overdraft fees charged to them on each and every transaction.
Related Information:
- Banks Fatten Up On Overdraft Fees Banks are getting very very wealthy charging their account holders overdraft fees....
- Debit Cards May Be Next on the Reform Agenda See what Congress has in mind for reforming the way debit cards are handled by the issuers....
- The Bank’s Take on Credit Card Reform Banks are likely to react in several ways when credit card reform becomes reality. Find out our thoughts....
- Bank of America Will Not Raise Rates Ahead of Reforms Bank of America has agreed not to raise interest rates ahead of credit card reform....