Rip-off Overdraft Fees Getting the Ax

November 13, 2009

New protections for consumers against predatory overdraft fees were just announced by the Federal Reserve. The new rules will ban banks from charging overdraft fees on debit cards and ATM transactions unless they get the consumer’s okay first.  Click here to  hear from consumers who’ve been affected and learn more.

In the video above, consumers told ABC News how they got duped into hundreds of dollars in overdraft fees.

Starting on July 1, 2010, banks will no longer be able to automatically enroll customers in overdraft protection programs, which charge fees when a consumer spends more money than they have in their account. Some banks charge as much as $39 per overdraft and charge multiple overdraft fees in one day.

In announcing the new regulation, Fed Chairman Ben Bernanke said, “The final overdraft rules represent an important step forward in consumer protection.”

Right now, more than 75% of banks automatically sign customers up for overdraft programs, according to an FDIC study.  The new rule does not apply to overdraft services for personal checks or automatic transactions, like monthly bill payments.  Banks will still be allowed to sign you up for those without asking first.