In a move to show the Federal Reserve is now here to protect consumers, the Federal Reserve banned ATM and debit card overdraft fees unless customers have opted to pay to ensure balance busting transactions don’t automatically go through. (source LA Times)
The new rules, which take effect July 1, 2010 mean that if you don’t have enough money in your account for the ATM withdrawal the transaction will be rejected. With any level of human reasoning, this should have always been the case. However, in the past, the bank would approve the transaction and tack on overdraft fees which can cost the average consumer hundreds of dollars per year.
Overdraft fees can typically range from $10 to $40 per transaction, and you will now have to sign a detailed written explanation if you want to be able to have these transactions in the future be approved. I am really curious to see the whole documentation and reading part as this has never stopped banks before. Be sure to read all and any fine print before you sign on the dotted line of anything regarding to overdraft charges on your checking account.
Such fees and other service charges on bank-deposit accounts have been an increasing profit center for banks in recent years, totaling $21.5 billion in the first six months of this year, nearly as much as the total for all of 1999. (source FDIC)
At the end of the day, you likely need to sit down and get a quality financial plan in place if you are constantly running into these type of situations. Make sure you check your balances frequently, and be aware of the new legislation put into place by your friends at the Federal Reserve.
Also check out these articles “Is it time to change Credit Cards” and “Calling All Students- Credit Card Last Call“
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