Federal Reserve Finalizes Rules on Overdraft Fees
Category: News and Notes- fhuff- 4:10 pm/ November 13, 2009New rules from the Federal Reserve will prohibit banks from charging overdraft fees unless customers consent to overdraft service on ATM and debit card transactions. That’s good news to people who want to keep more funds in savings and checking accounts.
“The final overdraft rules represent an important step forward in consumer protection,” said Federal Reserve Chairman Ben S. Bernanke in a statement. “Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service.”
Changes coming about because of the new rules include:
- Banks must send customers notices that explains overdraft services, fees, and the right to opt out
- Banks can’t discriminate against customers who choose to opt out of overdraft services
- Customers who don’t opt in must receive the same terms and conditions on savings and checking accounts
Banks have come under fire for charging unsuspecting customers overdraft fees. Last year banks received almost $37 billion in overdraft fees, according to Moeb Services Inc., a research firm. The Federal Reserve said consumer testing indicates most people don’t want overdraft protection on ATM and one-time debit transactions unless they opt in first.
Two large banks, JPMorgan Chase and Bank of America, recently changed their procedures for collecting overdraft fees to deal with the backlash from customers and legislators.
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