When you sign up for a checking account, most banks automatically enroll you in a “courtesy overdraft protection” program. This program means that the bank will approve overdrafts from your ATM or debit card — and charge you a $35 fee for each transaction, etc. But what if you don’t want the service? Well, the Federal Reserve has proposed a new regulation that will require banks to ask your permission before they sign you up.
The Center for Responsible Lending says:
Banks should simply not be allowed to enroll their customers-without their permission-in systems that approve overdrafts without warning, and that artificially increase the number of $35 fees the banks’ can charge for a shortfall. This practice is out of control. It is costing working people big chunks of their hard-earned income.
The “gotcha” practices that banks are using to inflate overdraft fees are not acceptable.
If you’d like to tell the Fed what you think of the proposal, you can email your public comments to regs.comments@federalreserve.gov include in the subject “Docket No. R-1343.” You can also use this form, provided by the Center for Responsible Lending. Remember that your comments will be public.
No Gotcha Fees [Center for Responsible Lending via CL&P Blog]
(Photo: Ryan McFarland, Kevin Dean)
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I’m a bit confused: I have overdraft protection on my checking account. I’ve dipped into it a few times when a paycheck didn’t arrive when I expected it (falls on a weekend).
I’ve never been charged an overdraft fee. I usually get charged the interest it accumulates, which is usually only a day or two since I always pay it back when I get paid.
Is this the same thing? If this is the case, I don’t need the bank to ask me for permission.
My case is simple I called Bank of America after having gotten a few fee due to a shipping service with Fedex charging me automatically after using it instead of requesting payment. I called them to opt out the program of overdraft protection to avoid being charge when no fund were in the account and force Fedex to call for payment and to my surprise I was told it was not even possible to. That the best they could do was lower my limit of over draft to zero (0) and that it would limit my fees to only one as the system would not approved overdrafts if my account was negative but would approve them if it was positive which is ridiculous. I had a courtesy limit of 250 and that meant that if i used 250 it would allow it, but with the courtesy limit at zero the rep could not tell me how much over could i go as long as my balance was positive, meaning that i could have 1 dollar balance and try for a purchase of say 300 and probably get approved. Stupid if you ask me that zero could mean more that 250.
So what about banks that offer the “courtesy” overdraft protection and then stop it without letting the customer know?! I had one of the CSR’s tell me, back in November when I was TRYING to cancel that feature, that most customers utilize the “courtesy” overdraft protection when they need to get something paid and would rather pay an additional $35 fee than have their utilities get cut off, etc. Wachovia will post an NSF fee to your account one or two days AFTER the incident occurs. If you aren’t aware that something hasn’t cleared for a day or two, and you continue to pay bills, or whatever, thinking you had more in your account, they throw you into a tailspin with these charges they’ve made sure they’ve gotten paid for and screw the other transactions. Before I get preached to about always paying on time, making sure you have enough money in the bank, yada yada yada…with this recession we are in, people are struggling to make ends meet. Me being one of them. THe last thing I need is for a totally unexpected charge be deducted from my account when I very well needed that $35.00 for fuel or food. Thirty-five dollards is alot to me. Somehow the bank feels that its a courtesy that they offer this however don’t feel its a courtesy to let their customers know if they will not have that option anymore. I’m so tired of banks.