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Fed: banks need customer consent on overdraft fees - I just have to say YAY!!!!

Posted by on Nov. 12, 2009 at 2:37 PM
  • 60 Replies

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.

Banks earn as much as $25 billion to $38 billion annually from overdraft fees, Fed officials said, but that total includes check overdrafts.

Many larger banks, including Bank of America Corp., JPMorgan Chase & Co., U.S. Bank and Wells Fargo & Co. began instituting similar "opt-in" plans in late September after coming under fire for the fees.

But consumer groups and other regulators, including Federal Deposit Insurance Corp. Chairman Sheila Bair, said new rules were still necessary to ensure smaller banks followed suit.

Many lawmakers have criticized the Fed for failing to provide sufficient consumer protection in the past, a defect they say contributed to last year's financial crisis. Sen. Christopher J. Dodd, D-Conn., on Tuesday introduced a bill that would strip the Fed of its consumer oversight.

Dodd also proposed legislation last month that would have imposed limits similar to the Fed's on the banks' ability to charge overdraft fees.

 

I have been so fed up with banks and their fees....they are theives. I am glad they are making some rules in regards to the overdraft fees. About time.

by on Nov. 12, 2009 at 2:37 PM
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Replies (1-10):
JamieLeigh02
by on Nov. 12, 2009 at 2:39 PM

Interesting. I remember once I overspent. One charge was !.00 something and the other was less than a dollar. I got charged almost $70 for overspending by not even $2. It's ridiculous really. 

Talee
by Gold Member on Nov. 12, 2009 at 2:42 PM


Quoting JamieLeigh02:

Interesting. I remember once I overspent. One charge was !.00 something and the other was less than a dollar. I got charged almost $70 for overspending by not even $2. It's ridiculous really. 

It totally is....and for some reason, what is on my bank statement online is somehow different on the bank tellers' screen when I have called to complain about overdrafts....they can obviously see that I have deposited cash to make up the difference but it's never at the right time.

I realize it is my personal responsibility to watch my finances and not let this kind of thing happen but it can become a very expensive unfair trainwreck which at this time I just can't afford.

Serenity7
by on Nov. 12, 2009 at 2:43 PM

Awesome

 

Gretchen2876
by Silver Member on Nov. 12, 2009 at 2:47 PM

We have had it happen to us too! Where THE BANK takes it's fee out, which overdrafted us, then other things went through, it was like a domino effect. I also really don't like how they put holds on funds now, before they have actually cleared.

Wyldbutterfly
by Bronze Member on Nov. 12, 2009 at 2:51 PM

It's about time. What those banks are doing is criminal. I over drew my account by two cents, yes I said two cents and it cost me 38 dollars and two cents to bring my account current!

I called told them I was closing my account, I was fed up with their crimianl ways and charges. They gave me my 38 dollars back!

WildKat
by Bronze Member on Nov. 12, 2009 at 2:55 PM

I'm with you - this is good news I think - but I don't understand this bit:

Quoting Talee:

Many lawmakers have criticized the Fed for failing to provide sufficient consumer protection in the past, a defect they say contributed to last year's financial crisis. Sen. Christopher J. Dodd, D-Conn., on Tuesday introduced a bill that would strip the Fed of its consumer oversight.

So let me get this straight.  The Fed FAILED to provide enough consumer protection, so they're STRIPPING the Fed of all consumer oversight duties?  Doesn't that mean there will be even less oversight than before?  Or are these duties going to get reassigned to someone else? 

Peace,

Kat

Talee
by Gold Member on Nov. 12, 2009 at 3:10 PM


Quoting WildKat:

I'm with you - this is good news I think - but I don't understand this bit:

Quoting Talee:

 

Many lawmakers have criticized the Fed for failing to provide sufficient consumer protection in the past, a defect they say contributed to last year's financial crisis. Sen. Christopher J. Dodd, D-Conn., on Tuesday introduced a bill that would strip the Fed of its consumer oversight.

So let me get this straight.  The Fed FAILED to provide enough consumer protection, so they're STRIPPING the Fed of all consumer oversight duties?  Doesn't that mean there will be even less oversight than before?  Or are these duties going to get reassigned to someone else? 

Peace,

Kat

Good eye....

Geez I have NO idea!!!!!!!!!

Della529
by on Nov. 12, 2009 at 3:21 PM


Quoting WildKat:

I'm with you - this is good news I think - but I don't understand this bit:

Quoting Talee:

Many lawmakers have criticized the Fed for failing to provide sufficient consumer protection in the past, a defect they say contributed to last year's financial crisis. Sen. Christopher J. Dodd, D-Conn., on Tuesday introduced a bill that would strip the Fed of its consumer oversight.

So let me get this straight.  The Fed FAILED to provide enough consumer protection, so they're STRIPPING the Fed of all consumer oversight duties?  Doesn't that mean there will be even less oversight than before?  Or are these duties going to get reassigned to someone else? 

Peace,

Kat

From what I can tell the bill introduced on Tuesday would take the oversight away from the Fed and give it to a new commission.

Raintree
by Ruby Member on Nov. 12, 2009 at 3:26 PM

We had this happen once- and it was actually the fault of the bank- and not ours. They put a deposit in as a negative. Luckily, we had a copy of the check receipt and a deposit slip from the bank. We have a good banker, and he cleared the whole mess up. But. We now only use cash- rarely use the debit card. Just don't trust them anymore.

WildKat
by Bronze Member on Nov. 12, 2009 at 3:31 PM


Quoting Della529:


Quoting WildKat:

I'm with you - this is good news I think - but I don't understand this bit:

Quoting Talee:

Many lawmakers have criticized the Fed for failing to provide sufficient consumer protection in the past, a defect they say contributed to last year's financial crisis. Sen. Christopher J. Dodd, D-Conn., on Tuesday introduced a bill that would strip the Fed of its consumer oversight.

So let me get this straight.  The Fed FAILED to provide enough consumer protection, so they're STRIPPING the Fed of all consumer oversight duties?  Doesn't that mean there will be even less oversight than before?  Or are these duties going to get reassigned to someone else? 

Peace,

Kat

From what I can tell the bill introduced on Tuesday would take the oversight away from the Fed and give it to a new commission.

Thank you for the clarification!   I met Dodd when I was a kid - I was in sixth grade and I don't believe he was a Senator yet back then.  He seemed smarmy and shifty-eyed, even to my 11yo self. 

I suppose as long as SOMEONE (competent) is overseeing this sort of thing, than that's good.

Peace,

Kat

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