Ever went to buy a cup of coffee, and then went home and realized you did not have enough to pay for it? Why did it go through, you might have asked– Because Banks make millions off of overdraft fees. Now the Feds say, no more:
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.
The underlining point is people have to be more conscience of the money they spend, but there is no questions the banks were out of line for even allowing the transaction to go through. About time Congress for common sense protocols…
