Consumer Blog
With new rules, you could avoid bank overdraft fees
The Federal Reserve Bank, which regulates the banking industry, is taking aim at the fees you pay when your bank lets you overdraw your account. A lot of consumers object to this system - they would rather have their ATM or debit card rejected instead deal with an overdraft fee.
Here's how it works: Let's say you have $50 in your bank account. You go to the ATM and request $60. Instead of rejecting your request, the ATM gives you the $60. But since you're now overdrawn, you get a $30 fee on your statement at the end of the month. Same scenario could happen with the debit card.
Some consumers ask: why doesn't the ATM just tell me I don't have that much money and refuse my transaction?
The rules proposed by the Fed (look toward the bottom of this page) would allow consumers to opt out of overdraft coverage. That way if they want it they can have it, but they're not required to.
Technorati Tags: bank, finance, overdraft fee, federal reserve, moagoconsumer, consumer protection
Posted by on May 16, 2008 9:01 am :: Comments (8) :: Permalink
8 Responses to "With new rules, you could avoid bank overdraft fees"
says:
May 20, 2008 12:12 pm
My bank is now charging $37.50 for "authorizations" that have not been posted to the checking account. This is a total rip-off and should be illegal since the money has not yet been paid out by the bank.
says:
May 20, 2008 12:34 pm
Bank sequences charges that are applied at the end of the day so as to MAXIMIZE the number of overdrafts. The Bank sorts the charges so that the largest charge is applied first and thereby eats up the balance much faster than if the lowest charge was applied first. For example, if the account balance starts out at $200 and there are 3 charges for $210, $20 & $4, the bank sorts & applies the $210 charge first which results in 3 overdraft charges; whereas if the 3 had been sorted & applied so that the lowest was applied first, the $4 & $20 charges would have cleared and only one overdraft charge would have resulted. Please include in the bill requirement to sort and apply the lowest charges first. Thank you.
says:
June 12, 2008 6:29 pm
My son has just gone through the same thing as Carl. The institution he was doing his banking with was charging him overdraft fees on pending charges. The bank insists that it is perfectly legal to do this. What I want to know is how can a fee be charged if the money has not been paid out yet?
says:
June 15, 2008 3:00 pm
So, if you have this happen, and choose to close the account instead of depositing money to cover the charges (and/or overdraft amounts) what will the bank do? Will this affect your credit report? Can the bank take legal action?
says:
June 30, 2008 7:25 am
I am so fed up with the people who make the laws and do nothing to protect the poor people of this country. It is rediculous for banks to charge so much for overdraft. This is happening as well as all else bad things in this country because the ones who are in gov. are having rich happy lives and do not care for the people if this country.
says:
August 4, 2008 7:16 pm
The practice of Highest to Lowest charge process is completely predatory. The bank tried to convince me the reason they did this was to protect me to make sure payments such as a mortgage payment was made without issue. The only benefit that came from the transaction that occured to me was they were able to more easily process $430 worth of fees instead of a more meager $33 fee. I find this completely fraudulent.
says:
November 22, 2008 6:57 pm
I completely agree with every statement on this page about the predatory nation of overdraft.WAKE UP AMERICA!!! Your being robbed wothout a mask and a gun if you are tired of paying for your banks losses on other investments and your tired of your hard earned money paying for quite literally air.Start calling Congress Start calling senate, report them to the banking commisions.Call your local radio stations,& newspapers don't pay their fees and draw attention to them.They don't like publicity but for God's sake fight back.With enough of us anything is possible.
says:
February 10, 2009 1:54 pm
I agree that this practice is predatory and bordering on extortion. Givent the rise in usage of debit cards, banks are taking advantage of setting policies to their financial advantage that have a harmful affect on their customers. Most customers are under the impression that the debit card will only allow them to spend what they have in their account. With banks authorizing payments even when there is a negative balance in the account, they can reap in the profit through these fees. Given the state of the economy, I can't see why this is continuing to be allowed. Please help!!
