Overdrafting makes the Consumerist very sad, and banks very happy.
Kiplinger says that banks have already hauled in $19 billion this year in overdraft fees, and are quickly moving to amend policies that are attracting threats of regulation from the government.
Overdraft fees have morphed into a big money-maker for lenders, exceeding $19 billion this year — up 85% from 2004. Banks charge as much as $35 for a check, ATM withdrawal or debit purchase when funds to cover them are lacking, even if it’s a $2 cup of coffee that puts a customer into overdraft territory. The sharp increase in total fees is largely due to two factors: The increasing use of debit cards and the fact that many banks automatically enroll customers in overdraft programs without them knowing about it.
Banks say that they will start including more disclosure and “a requirement that consumers “opt-in,” providing written consent that they want overdraft coverage and agree to the fees.”
They’ll also offer less costly options when consumers open an account (such as linking the checking account to a savings account), program ATMs to offer warnings, and employ tiered fee systems in which the first overdraft might be waived but each additional overdraft would incur larger and larger fees. Will they really do what they say? Reply hazy. Try again.