Fed: banks need customer consent on overdraft fees

Fed: banks need customer consent on overdraft fees

WASHINGTON – Banks will have to secure their customers' consent before charging large overdraft fees on ATM and debit card transactions, according to a new rule announced Thursday by the Federal Reserve.

The rule responds to complaints from consumer groups, members of Congress and other regulators that the overdraft fees are unfair because many people assume they can't spend more on a debit card than is available in their account. Instead, many banks allow the transactions to go through, then charge fees of up to $25 to $35.

For small purchases, such as a cup of coffee, the penalty can far exceed the actual cost of the transaction.

Under the Fed's new rule, which will take effect July 1, banks will be required to notify new and existing customers of their overdraft services and give customers the option of being covered. If customers don't "opt in," any debit or ATM transactions that overdraw their accounts will be denied, Fed officials said.

Many consumers do want checks and regular electronic bill payments to be covered in the event of an overdraft, Fed officials said. As a result, those transactions aren't covered by the rule.

http://news.yahoo.com/s/ap/20091112/ap_on_bi_ge/us_fed_overdraft_fees

a number of years ago. $39.99 for a half gallon of milk was too much.

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Talk about adding insult to injury.

This junk is all compute3rized and sure wouldn't take a programmer 7 1/2 months to change!

or am I being chronologically challenged?

few lines of code in some programs and a notice to all their customers that could be sent on a post card!

I was Dir. of Finance for a corp. before I retired, and I only WISH I would have been given 1 1/2 months to get something done!

There was a time when the card would be denied if you didn't have enough money available. But they choose to let you go over so they can sock you that fee. I was ten cents over last month and got socked $37. yes, it was my own fault. i thought i was ok. but it was ten cents!! grr. There are times when it would be better for the bank to cover it. Like a check.... it would be a lot worse if it bounced and you ha the fees from the place you wrote the check. But i don't write a lot of checks these days.

as I have recounted here on DU, I am socked with $300 for an $11 overdraft. The bank rearranged the transactions twice in order to penalize four purchases of less than five bucks. That resulted in $297 overdraft over the weekend.

I am fighting it.

One thousand to ten thousand percent more than the transaction causing the overdraft. The fact that our legislators have been bought out and now have allowed usury to be "legal" doesn't make it right any more than it made it right for the Nazis in Germany to kill people just because they put laws on the books allowing them to do that.

And it is also the sort of stuff that the Anti Trust laws were once used for. In the past, there might have been a possibility of some banks not doing this, since some banks might not want to get hit with an anti trust suit. But since ALL THE BANKS have the same policies, how can you shop around for a more reasonable and more "moral" bank?

Thats what I take from this action.