FED: "Banks Need Customer Consent on Overdraft Fees"

[Hundo®]

This is an excellent move by the Federal Reserve to curtail super-excessive fees the banks squeeze out of millions regularly.

http://news.yahoo.com/s/ap/20091112/...overdraft_fees (http://news.yahoo.com/s/ap/20091112/ap_on_bi_ge/us_fed_overdraft_fees)



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.

[quickdodge®]

My bank has been offering that for me for a long time. I have the option to NOT have overdraft funds available. Later, QD.

[Hundo®]

My bank has been offering that for me for a long time. I have the option to NOT have overdraft funds available. Later, QD.


Outstanding, what bank is that? If i ever get charged $35 again for overdrafting $.06 im going to murder someone. (however, i haven't done it in at least 2 years)

[Julio]

I think is dumb either way.. people should always know how much they have in their accounts.. Blaming the banks is silly though.. even though the fees are crazy..

You overdraft.. your fault.

[Hundo®]

I think is dumb either way.. people should always know how much they have in their accounts.. Blaming the banks is silly though.. even though the fees are crazy..

You overdraft.. your fault.


I agree, which is why i became more conscious and i haven't done it in years. At the same time however, I think it's stupid that they let you spend money you don't have, then charge you for it!

[Jason..]

I think is dumb either way.. people should always know how much they have in their accounts.. Blaming the banks is silly though.. even though the fees are crazy..

You overdraft.. your fault.
But accidents do happen.

[Ziptied]

I agree fault is on the account holder, but fee's by banks are outlandish. I know with Bank of America you can bitch and tell them you'll leave and they will drop them.

[uproot]

But accidents do happen.

Yeah I deposited $500 cash one day, on top of the money already in the account, the next day it was in the negative several hundred. obvious bank error and it was fixed. I do like the idea of check/debit cards being denied when there aren't enough funds, makes sense.

[Revmaynard]

I think is dumb either way.. people should always know how much they have in their accounts.. Blaming the banks is silly though.. even though the fees are crazy..

You overdraft.. your fault.


Although that is a good point, I know multiple times before when I've called to check my balance it has been different than what my online balanced showed. At that point it can be a tough call on what has cleared and whatnot already. But yea, after I got a few over drafts when I first opened my account I said ''never again'', and just make sure to stay covered. lol

[BluesClues]

Wachovia will do sneaky shit like hold a credit card charge for like a couple of weeks before they take it out and let other payments go through causing an overdraft! Got me several times that way. Others have told me that Wachovia has done the same to them

[Brick]

Agreed on it's the account holder's fault except for one thing. Banks will process a charge before a deposit on the same day to collect fees, they also will process charges in order of amounts to get the most in overdraft fees.

[BluesClues]

Agreed on it's the account holder's fault except for one thing. Banks will process a charge before a deposit on the same day to collect fees, they also will process charges in order of amounts to get the most in overdraft fees.
Exactly what Wachovia does :yes:

[DB4LYFE ™]

Wachovia will do sneaky shit like hold a credit card charge for like a couple of weeks before they take it out and let other payments go through causing an overdraft! Got me several times that way. Others have told me that Wachovia has done the same to them

Your right... for once!

~DB4LYFE

[BluesClues]

Your right... for once!

~DB4LYFE
I'm always right bish! :tongue1:

[Nismo]

Awesome so the government is regulating another industry. Great.

[green91]

Awesome so the government is regulating another industry. Great.

Bingo.

[Julio]

Wachovia will do sneaky shit like hold a credit card charge for like a couple of weeks before they take it out and let other payments go through causing an overdraft! Got me several times that way. Others have told me that Wachovia has done the same to them



Actually, I dont think thats totally correct.. When you use your debit card as a credit card... the hold is made by the company where you made the purchase at.

That credit transaction/hold will not be released until the company closes/batches out.. then the bank will release the hold...

The more your money sits in the bank, the more money the bank makes of it.. So this process (hold) helps the bank make money...

So technically, is not the banks fault.....in most cases...


With all the technology in todays world only idiots can overdraft... I mean.. mobile banking.. alerts.. just keep an eye on your checking account .. and you are good.

[green91]

With all the technology in todays world only idiots can overdraft... I mean.. mobile banking.. alerts.. just keep an eye on your checking account .. and you are good.


Agreed. Its pretty simple actually. If you've got $500 in the bank.. and you use your debit card to purchase $510 of items.. you're going to overdraft. Don't spend money you don't have and you can avoid all overdraft fees. Using a debit/atm card is no excuse for not keeping a register or running balance of your account.

[cjhutch]

Awesome so the government is regulating another industry. Great.


Bingo.

Neither of you know what you're talking about. Go do some research and then come back and post.

[green91]

Neither of you know what you're talking about. Go do some research and then come back and post.

Why? Because people don't read the terms of their checking accounts when they sign up? Or because they don't ask questions when opening new accounts? Banks cannot charge fees that were not disclosed to the customer.

[cjhutch]

Why? Because people don't read the terms of their checking accounts when they sign up? Or because they don't ask questions when opening new accounts? Banks cannot charge fees that were not disclosed to the customer.

Since you couldn't comprehend my post with me including the quotes I will break it down for you. The person above you made a comment about the Federal Reserve regulating banks. Judging by the use of the word "Great" at the end combined with recent events involving government intervention there is an implied sarcasm. You quoted that with "bingo" meaning you agree with what was posted. I then proceeded to tell you both that you need to learn what the role of the Federal Reserve is in order to make an educated post. Since you have now failed twice I will spare you a third failure.

The Federal Reserve was formed as a central banking system in response to numerous issues with banks around the country. In short the job of the Federal Reserve IS to regulate banks. Therefore sarcasm should not have been used because the Federal Reserve is doing the job it was created for.

[green91]

The Federal Reserve was formed as a central banking system in response to numerous issues with banks around the country. In short the job of the Federal Reserve IS to regulate banks. Therefore sarcasm should not have been used because the Federal Reserve is doing the job it was created for.

Overdraft and other operational fees are a means of making profit for a bank. Yes, the role of the Federal Reserve is to regulate some portions of bank operations. My concern is that with to much government regulation (as seen with coerced sub-prime mortgages) that banks will have a harder time being profitable and will in turn have to raise fees or interest rates elsewhere to make up for the loss of income from these fees. Its ridiculous to me that consumers would sign up for services knowing well of these fees such as overdraft, then yet complain to congress and other representatives when they are charged for them.

[cjhutch]

True, but the rule just states that all they have to do is get consent from the customer. Nowhere does it state that banks have to stop overdraft fees or reduce them. It's really not that big of a deal. I know when I signed up with my bank it was there in bold print the amount of the overdraft fee. I also know that not all banks do this and rely on the fine print instead. As far as making it hard for banks to make money I don't think that will be a problem. Have you seen how much they charge to use an ATM nowadays. I went to an ATM the other day because a friend needed to borrow $20. I drive up and there is a fee of $3.00 for the transaction.:eek: That's like taking out a 15% interest loan on myself for $20. I went to WalMart and just got cash back on a purchase instead. Banks are also aware of this and I can see them initiating some fee that is triggered whenever you get cash back on a purchase that doesn't equal a certain dollar amount.

[BanginJimmy]

This is just more govt intervention in private businesses. Before long, the govt will require all Americans to have 1 month of expenses in savings or you will face garnished wages.

[YoTa_BoX]

Bank of America are a bunch of fucking crooks. I own a business, and just to name 1 time they fucked us. We get an insurance check in for 3,300 and a personal check in for 1000 from 2 different customers, mind you this was last Thursday. The checks clear, money is in the bank. I pay the rent on the building and yesterday they deiced to put a fucking hold on ALL of the money i deposited, stating it was because of the personal check. We go in the negative right as checks we wrote for parts on Monday start clearing. We end up with 140 dollars in overdraft fees, and they are telling us they cant refund that.

[Total_Blender]

So without overdraft coverage, what happens if you bounce... do they just not process the transaction?

This could get sticky, like say someone goes to a restaraunt and eats a meal then they can't pay with their card. That would probably be the same penalty as shoplifting or petty theft, right?

Or would they let it go through and then count it against you as a bad check?

I'm not against the banks charging fees because allowing the transactions to pass keeps consumers who DO overdraft out of some sticky legal situations like that. The problem is that the fees are not proportional to the amount of overdraft because the fees are assessed at a flat rate. Like if you overdraft by $0.01 its a $30 fee

And most banks, like Wachovia, process the largest transactions first. Say you have a bunch of little $2 transactions and a big $100 transaction, the big one will pass first and the little ones will come after. So if you have an overdraft, you get charged the flat rate fee for every little $2 transaction that wouldn't pass.

Its fucked up that someone can overdraft by $10 and rack up hundreds in fees. But the banks DO have protections for consumers, like they can link your savings account or credit card to your checking so it will cover the overdrafts and you won't get charged fees.

Banks aren't supposed to make their money through fees, banks have traditionally made their money by collecting interest on the money they loan out. When you put money into a bank, you make it available to that bank to loan out to other consumers and earn interest for the bank.

I don't have a number handy for the amount of money that banks are making off of overdraft fees, but I know that its a lot. And if any lobby has the influence to get its own way with congress, its the banking lobby. So this is something I'll be watching closely. I'm in favor of reform to a point that it protects consumers, but if the banking industry has too much influence on the final product, we may end up with something worse than before.

[green91]

I'm not against the banks charging fees because allowing the transactions to pass keeps consumers who DO overdraft out of some sticky legal situations like that.

Thats why banks offer Overdraft protection also. I personally carry this. They give you the option to either tie your Checking to a savings account and will move funds over in the event of an overdraft, or also to have a line of credit associated with your checking account in the event that you drain your positive cash.

You do have to request these but once again most people don't know this. Thats why rather than being complacent, people need to ask questions and have a plan in place rather than waiting until they've overdrawn their accounts and are looking at hundreds in fees face to face.

[green91]

This is just more govt intervention in private businesses. Before long, the govt will require all Americans to have 1 month of expenses in savings or you will face garnished wages.

This is my sentiment exactly.

[Sammich]

I think is dumb either way.. people should always know how much they have in their accounts.. Blaming the banks is silly though.. even though the fees are crazy..

You overdraft.. your fault.
I AGREE, BUT ALSO AT THE SAME TIME, THERE ARE TIMES WHEN CERTAIN TRANSACTIONS DONT GO THROUGH WHEN YOU THINK THEY DO/SHOULD, YOUR BANK ACCOUNT IS OUT OF WACK AND YOU GET PENALIZED FOR A MISTAKE. I KNOW THERE ARE TIMES WHEN I SWIPED MY BANK CARD KNOWING FULL WELL THAT I DIDNT HAVE ENOUGH MONEY ON IT, BUT THOSE WERE TIMES WHEN I NEEDED A FULL TANK OF GAS AND I HAD NO PROBLEM FOOTING THE BILL FOR A FULL TANK OF GAS, SOMETHING I NEEDED.

BUT TO RESOLVE THAT ISSUE, PERIOD, OVERDRAFT PROTECTION FTMFW.

AS FAR AS THIS BILL THEY ARE TRYING TO PASS, I'M ALL FOR IT

[anny]

I think is dumb either way.. people should always know how much they have in their accounts.. Blaming the banks is silly though.. even though the fees are crazy..

You overdraft.. your fault.

True its absolutely frightening to think people do not know how much money they have in the bank. If you are that ignorant as to not know how much money you have to spend then you probably deserve to pay crazy fees!

[anny]

The minute you send money off or give a check to someone the money is gone you don't have it any more...just stupid to say well 3 days to clear...come on you spent the money its gone!

[Sammich]

The minute you send money off or give a check to someone the money is gone you don't have it any more...just stupid to say well 3 days to clear...come on you spent the money its gone!
AGREED, BUT AT THE SAME TIME YOU CAN WAIT AND WAIT FOR A CHECK TO CLEAR, A PERSON COULD HAVE CASHED IT, AND IF UR BANK IS JUST THAT RETARDED, THEY WILL DECIDE NOT TO SHOW IT AGAINST YOUR ACCOUNT, AND IF U DONT CHECK TO SEE WHY IT HASNT CLEARED, IT COULD CLEAR/SHOW UP AGAINST UR ACCOUNT AT THE WORSE TIMING.

SO MY SAYING THAT IS TO SO THIS, CERTAIN TIMES, ITS NOT AT THE ACCOUNT USERS FAULT, SOMETIMES THE BANK DOES THINGS WRONG/TAKES TOO LONG TO SHOW THINGS UP. I'M SPEAKING FROM PERSONAL EXPERIENCE AND THAT FROM WHICH I'VE HEARD FROM OTHER BANK USERS...THIS IS WHY I SWITCHED BANKS TO A CREDIT UNION AND I HAVENT HAD ANY ISSUES YET. THE OVERDRAFT WAS MY FAULT WHEN I DID IT WHERE I CALCULATED WRONG AND SWIPED BECAUSE I NEEDED GAS, OTHER THAN THAT, I ADDED OVERDRAFT PROTECTION JUST INCASE A MISHAP, HAPPENED

[quickdodge®]

SO MY SAYING THAT IS TO SO THIS, CERTAIN TIMES, ITS NOT AT THE ACCOUNT USERS FAULT, SOMETIMES THE BANK DOES THINGS WRONG/TAKES TOO LONG TO SHOW THINGS UP.

No sir. It's still up to you to know how much is in your account, regardless of how fast/slow the bank processes it. You should always go by your registry. Don't rely on looking online at your account. If you keep a clear and up -to-the-minute check register in your checkbook, then as soon as you write that check, you enter it in the register. That way, you know your balance before the bank does. And you always go by that checkbook balance. See what I'm saying? Later, QD.

[Sammich]

No sir. It's still up to you to know how much is in your account, regardless of how fast/slow the bank processes it. You should always go by your registry. Don't rely on looking online at your account. If you keep a clear and up -to-the-minute check register in your checkbook, then as soon as you write that check, you enter it in the register. That way, you know your balance before the bank does. And you always go by that checkbook balance. See what I'm saying? Later, QD.
I DO, BUT I'M ONE OF THOSE THAT HATE PAPERWORK AND DO IT ALL IN MY HEAD, WHICH I'VE DONE QUITE WELL THIS YEAR, EVEN EXPECTING WHEN I'M GONA OVERDRAFT. WHICH IS SHY I SAID THAT, WHEN I COMPUTED THINGS IN MY HEAD AND I'M SITTING THERE WAITING FOR IT TO CLEAR, IT SEEMS TO TAKE ITS SLOW TIME. I CAN GO IN ASK THEM WHAT THE DEAL IS, THEY GIVE ME SOME HUMDRUM EXCUSE THAT MAKES NO SENSE, BUT WHEN IT COMES TIME FOR THAT MONEY TO COME OUT AND I OVERDRAFT, THEY ARE NOT WILLING TO WORK WITH ME SEEING AS THOUGH I CAME IN AND SHOWED CONCERN ABOUT SOMETHING THAT HAS YET TO CLEAR, SEE WHERE I'M COMING FROM?

[quickdodge®]

SEE WHERE I'M COMING FROM?

In a way, I do. About five years ago, I would have totally seen where you come from. It took me a long time to take the time to figure out the simpler things in money management. I made multiple overdrafts all the time. I didn't keep track of my money right. I did the "keep it in my head" routine and it almost always backfired. Taking the time to do the paperwork does seem to be a hassle, but I think, in the end, that 30 seconds it takes to jot down that ATM withdraw or that check purchase is definitely worth keeping the $30-40 that would come out of your account for overdrafting. Later, QD.

[Sammich]

In a way, I do. About five years ago, I would have totally seen where you come from. It took me a long time to take the time to figure out the simpler things in money management. I made multiple overdrafts all the time. I didn't keep track of my money right. I did the "keep it in my head" routine and it almost always backfired. Taking the time to do the paperwork does seem to be a hassle, but I think, in the end, that 30 seconds it takes to jot down that ATM withdraw or that check purchase is definitely worth keeping the $30-40 that would come out of your account for overdrafting. Later, QD.
I'LL AGREE...SOONER OR LATER, I'LL STOP BEING LAZY AND START DOING PAPER WORK..PROBABLY LATER, LOOKING AT MY TRACK RECORD