Federal Reserve to Ban ATM and Debit Overdraft Fees Without Opt-In

November 12, 2009 by · Leave a Comment
Filed under: Policy News 

This is good news.  With the banking industry making over $37 billion in fees stemming from these practices and not normal banking activities like lending and making interest on those loans.  In my opinion this is a form of financial parasitism because instead of practicing normal banking, our industry has instead turned to making fees from normal banking operations they are targeting customers that have the least amount of excessive income and that shows in the facts a large portion of these fees are from overdraft charges and if you have excessive income to put into your account then you would not overdraft regularly.

The Federal Reserve will prohibit banks from charging overdraft fees on automated teller machines or debit cards, unless a customer has agreed to pay extra charges for exceeding account balances.

Financial companies will have to explain overdraft programs and fees, as well as choices available to consumers, the Fed said today in a statement announcing a rule that takes effect next year. Lenders collected almost $37 billion in overdraft fees last year, according to research firm Moebs Services Inc.

“The final overdraft rules represent an important step forward in consumer protection,” Federal Reserve Chairman Ben S. Bernanke said in the statement. “Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service.”

House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd have separately introduced legislation that would restrict banks’ ability to charge overdraft fees. Both bills would permit one overdraft fee a month or six in a year.

Source: Bloomberg

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