Should Banks Be Required To Ask Permission For Overdrafts?

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 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)