At the end of last year the Federal Reserve Board announced a new set of rules that state that debit card users must be given the opportunity to opt-in to overdraft fees for ATM withdrawals and one-time purchases. This ruling will take effect July 1, 2010. It is a part of a series of decisions issued over the past year by the country’s central bank to limit abusive practices by banks.
Under the new rules, all debit card holders must be given notice of the bank’s policies, including those on overdraft fees. Cardholders can sign up to be charged fees or not, and banks cannot change the terms of service afterward.Banks will still be allowed to charge overdraft fees for recurring debt card purchases, such as recurring utility bills that are automatically charged, as well as on bounced checks. The measure is mainly aimed at one-time debit card purchases or ATM withdrawals that can often result in fees greater than the purchase amount.
Of course, those who overdraw their bank accounts won’t be given free money by their banks. Overdraft protection allows banking customers to make payments even when their funds are limited, and are charged a fee for the convenience. Those who opt-out of overdraft protection may instead see their transactions declined if they attempt debit card purchases when their accounts are low. However, any overdraft transactions approved by the bank cannot result in fees. “Overdraft fees can be costly,” said Governor Elizabeth A. Duke, the chair of the Board’s Committee on Consumer and Community Affairs. “Our rule will help consumers better understand the terms and conditions of overdraft services and will give them an opportunity to avoid fees when these services do not meet their needs.”
If you live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Golden, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, or Wheat Ridge, Colorado, please feel free to contact me with any questions. Kevin D. Heupel, Colorado Bankruptcy Attorney, 303-955-7570, COBankruptcyHelpEmail, free-consultation form.
