| Overdraft fees have been a thorn in the side of bank | | | | Banks counter that this last practice is not unfair |
| customers for years, and the total amount of money | | | | because, after all (they say), customers have agreed |
| that banks take in due to overdraft fee charges has | | | | to enroll in the overdraft protection programs that |
| been on the rise. This has been due mainly to the | | | | authorize the bank to do so. The trouble is, most of |
| widespread implementation by banks of overdraft | | | | these programs have traditionally been "opt-out," which |
| protection programs tied to checking accounts. | | | | means that if customers don't ask NOT to be enrolled |
| The sheer amount of income due to overdraft fees | | | | in the programs, they are automatically enrolled upon |
| that banks have been enjoying has been staggering - | | | | account creation. |
| to the tune of over $25 billion (with a "b") per year for | | | | The Fed Steps In with Opt-In Requirement |
| the past several years. | | | | It is for that reason that, starting on July 1, 2010, banks |
| At first glance, the concept of banks getting | | | | are required by new Federal Reserve rules to make |
| compensated to cover debit charges, credit card | | | | their overdraft protection programs opt-in rather than |
| charges, and check charges that are made by their | | | | opt-out. The new provisions mean that: |
| customers against an account with an insufficient | | | | 1. Customers must be given the opportunity to agree |
| account balance seems fair. And, in principal, it is: after | | | | to or reject enrollment in overdraft protection |
| all, bank customers should just be more careful with | | | | 2. Before opting in, they must be given the opportunity |
| how they balance their account, right? Well, yes and | | | | to fully review the bank's overdraft fee policy |
| no. Like most situations where money is on the table, | | | | 3. Customer who choose not to opt in must be |
| things are not quite that simple. | | | | offered the same pricing and service terms as |
| Deceptive Overdraft Practices by Banks | | | | customers who do (in other words, no discrimination |
| Many responsible bank customers feel that their banks | | | | based upon enrollment status) |
| practice what amount to deceptive practices. For | | | | Are These Rules Enough? |
| example, some banks have admitted to something | | | | These rules will likely go a long way to reducing total |
| called transaction stacking, whereby they will process | | | | customer expenditures on overdraft charges, since |
| high-value pending charges before low-value charges | | | | undoubtedly some customers will choose not to enroll |
| for a given bank customer, thereby increasing the | | | | in overdraft protection. However, for those customers |
| chances of an overdraft occurring on a given day. | | | | who do choose to enroll, most of the other |
| Some customers also suspect that their bank is | | | | seemingly-deceptive overdraft practices will remain in |
| purposefully timing the processing of outstanding | | | | effect - continuing to cost customers billions. |
| checks so that the checks "hit" the account when the | | | | An Alternative to Not Opting In |
| balance is not large enough to cover them. | | | | Another choice that bank customers have is to switch |
| But, one of the bank practices that takes many | | | | to a no-overdraft-fee bank. These banks promise to |
| customers by surprise is that of allowing debit charges | | | | never charge an overdraft fee - even when the |
| to merchants to get processed - even when the | | | | customer makes a charge or writes a check that |
| customer's account balance is too low to cover them. | | | | overdraws the account. No-overdraft-checking |
| On the surface this seems like a courtesy, but the | | | | accounts may be just what the doctor ordered when |
| resulting overdraft charges of $30 or more per | | | | it comes to saving hundreds of dollars each year in |
| instance don't feel that way to most customers. | | | | overdraft fees for many bank customers. |