Saturday, April 3, 2010

Federal Reserve Consumer Information on Overdrafts

With its new focus on being consumer-friendly, the Federal Reserve has published a circular on what consumers need to know about the new debit card overdraft rules. Remember, as of August 15th, banks cannot include customers in their overdraft services for ATM/Debit card transactions without their opting-in. The rules apply to new accounts opened beginning July 1. The Fed has even provided a copy of the standard form disclosure that it approved for banks to use, so that consumers can (hopefully) recognize the form when they get it in the mail (see Form). With an emphasis on consumer "choice" and education, it is good to see the Fed getting the word out.

Will consumers understand what this is all about? I suspect so. Just this last week, our 20 year old baby-sitter commented that she wished her bank, Chase, would follow Bank of America and give up on overdraft fees (See Hooray for Bank America). Apparently the word has gotten out positively for BOA. She'd been hit $35 on a debit card overdraft of less than $5. Expensive lesson, yes, but just one example where the new rules will help. Better to be denied at the counter, rather than get the hefty fee. I told her not to worry, the new rules are coming soon.



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Anonymous said...

Bad news: Bank of America, seems to be working over time on these Over Draft fees for everyday Debit Cards: I asked very strongly but verbally, to a "customer service rep", to NOT OPT IN for overdraft "protection", in fact it was new to this account. That is-I never had such a "protection" in the past with this very account-it only began to happen right after the Obama Adm, gave them Billions to keep a float.
They began doing this "overdraft thing" on an account I have had since 2004. In the past, if I tried to purchase, say some extra listening time on my pandora account, for 0.99 cents, it just wouldn't go through at all. But recently I have been billed 35.00 a Pop, for those incidentals. Even AFTER I verbally said for BOA to the REP, to STOP IT. He said they would. Well they didn't. AND they held up a check deposited into another BOA account, that was to be sent to my BOA account-they held it up for over a week...thus the SEVEN 35.00 dollar penalties.