Overdraft fees: A common sense ruling

Fed Bans Mandatory Overdraft Protection

Excerpt:

The Federal Reserve announced new rules on Thursday that will prohibit banks from automatically enrolling customers in so-called overdraft protection programs, which charge high fees for exceeding the balance in an account.

The programs have been a large source of revenue for banks and apply to consumers using debit cards or ATMs. Typically, the programs have been pitched to bank customers as a useful service. Under them, institutions like Bank of America, Wells Fargo and Citigroup approve transactions, even if a customer has insufficient funds in his account. The banks then levy fees of $25 to $40 per transaction.

Consumers have blasted banks for imposing multiple overdraft fees when customers exceed balances by as little as 50 cents. Starting next July, banks will have to convince get customers’ consent to opting into overdraft programs, rather than automatically enrolling them.

"The final overdraft rules represent an important step forward in consumer protection," Federal Reserve Chairman Ben S. Bernanke said 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."

Comment: No more mandatory "Opt In". Of course for those that Opt Out .... they may swipe a debit card for a purchase and be declined. By the way Wells Fargo has something called Text Banking that is free to Wells Fargo customers. More information here: Text Banking. I don't have a fancy web enabled phone so I cannot use their Mobile Banking at wf.com service. But the text banking is pretty cool and even an old guy like me could figure it out.