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The New Rules for Overdraft Fees
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Jul 2010
In the past, if you tried to withdraw more money than you had in an account or made a debit card purchase with insufficient funds, a bank could charge hefty overdraft fees regardless of the charge amount and without a full explanation. Some consumers found themselves paying $10-$20 charges for an overdraft of a dollar or less. And the fees proved to be quite profitable; in 2009, banks made approximately $32 billion from charging consumers overdraft fees on debit card purchases, ATM withdrawals, and personal checks.
Starting July 1, 2010, however, new federal rules change to the way banks charge overdraft fees. The main change coming from the Federal Reserve Board requires banks to allow customers to opt out of overdraft protection—and clearly outline any fees associated with continuing overdraft coverage. This includes fees for ATM transactions as well as debit card purchases. Previously, customers were often automatically enrolled in banks’ overdraft protection program. In most cases, if you opt out of overdraft protection, the bank won’t honor your purchase and your card will be rejected, but you also won’t incur a $20 overdraft fee for a $2 cup of coffee.
In March 2010, Bank of America got rid of overdraft fees associated with its customers’ debit card purchases. Now, if a BofA customer tries to make a debit card purchase without sufficient funds, the card will be declined and an overdraft fee will not be charged. At a BofA ATM, a customer will have to actively agree to a $35 overdraft fee before receiving cash that’s, well, not in the account.
For more info:
Federal Reserve Board’s New Rule (PDF)
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20091112a1.pdf
Office of the Comptroller of the Currency – “Answers About Overdraft Fees and Protection”
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Comments
Submitted by on Jun 22, 2010 - 5:19PM
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Submitted by on Jun 23, 2010 - 9:14AM
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If your a law abiding citizen why not make it easier
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Submitted by on Jun 23, 2010 - 10:22AM
Is it possible for someone to pose as you to get insurance money that was to go to you and you not know about it?
Submitted by on Jun 23, 2010 - 12:16PM
Yes, it is; however, it can be traced. You should receive a form called an "explanation of benefits" from your insurance carrier. This form tells you that a claim has been processed and paid. It tells you who presented the claim and whether the check was paid to the provider (doctor, mechanic, etc.) or the subscriber (you). You should have a number where you can call your insurance company and get them to provide you with the specifics.
Submitted by on Jun 24, 2010 - 8:01AM
don't believe this will help. some banks and credit unions already charge a small fee for overdraft. like $5.00.
then they charge a large fee for doing the favor of paying the withdrawl. $25.00 to ?.
what gets me is you can deposit money the same day money is withdrawn and you still get wacked because computers don't care...nothing goes in banking for the people unless you happen to be a large money depositer. rich in other words. that makes you special.
Submitted by on Jun 29, 2010 - 9:13AM
At our bank. All deposits are processed before any withdraws performed on the same day. Now, if you don't make a deposit until after 2 PM, it won't be processed until the next day. Therefore, any NSF whoopsies won't be covered by the deposit. I live in a small town and our bank is a fairly small fish, but I just assumed that all banks worked this way (or at least they should).
I guess a good rule of thumb is to try not to cut it so close or hold off a payment until you're sure your deposit has gone through.
Submitted by on Jun 28, 2010 - 2:38PM
This article is incorrect regarding Bank of America. I am not enrolled in overdraft protection and just last week, they authorized a debit card purchase that was over the limit and hit me with a $35 fee.
Submitted by on Jun 28, 2010 - 3:46PM
I read your Bank of America comment with great interest. My adult daughter, poor college student, used her debit card this month (June 2010) and did get charges for overdraft on her debit card. I might add that this was her first experience with a debit card, as well. I know the parents could have done a better job of preparing her about online balance checks, but this isn't about value judgements, just the facts.
Yes, most purchases were under $5.00 and each overdraft charge was $35. The total was $520 dollars because the bank continued to pay the charges and add the overdraft fees before we discovered the issue when B of A mailed overdraft notices to our house, not my daughter's address. The bank reversed two charges for a total of $70, so we still had to foot the bill for $450 worth of a painful experience.
Submitted by on Jun 29, 2010 - 6:23PM
hello complain to your state attorney general....you can do it on line...
Submitted by on Jun 30, 2010 - 5:46AM
I too, am a BofA customer. For 10 years even. In fact, we have our mortgage through BofA. Due to a down ATM and discrepancies between mobile banking and the actual current balance I was also recently charged $35 for a cup of coffee...11 times over the course of a weekend. $385 later...."oh that's too bad". sorry you can't feed your kids because your account snowballed, sorry we charged you for all the little transactions instead of the larger one. "We can give you a one-time courtesy credit of $35" WHAT!?!
My other bank has already put in place the no overdraft system and doesn't charge it's customers an exhorbinate amount of money.....for a cup of coffee
Submitted by on Jun 28, 2010 - 3:46PM
Overdraft fees at PNC Bank are ridiculous. They charge $35 per overdraft, even several in one day, as they continue to accept your purchases for $4 here and $6 there. They allow you to take out money from any ATM, including their own, when your account has already incurred an overdraft fee that day.
Not only that, but then they charge you an additional $7 per day that your account is overdrawn. So if you don't get paid until Friday and you overdraft on Monday, you are screwed.
I'm sure PNC collected $30 billion of the $32 billion collected in overdraft fees in 2009. I hope this breaks them. Impossible bank to deal with.
Submitted by on Jun 28, 2010 - 3:50PM
This is great! Although it will not solve all problems with banks taking their clients money it is a start. I personally have worked in a bank and had to hear everyday how we should have no mercy on the consumer and that if we refunded fees that we could be fired for it. It is amazing that the banks have gotten away with this for so long. I personally remember the crying single mother or the retired vet that I could not give fees back to, HUNDREDS OF DOLLARS WORTH, so they couldn't eat or put gas in their car. I have thought for years that every bank should do what BOA is doing and decline the card if the money isn't there. Greedy banks should be forced to do this and do right by their customers! I personally am going to give all my business banking and consumer banking to BOA for being the pioneer on this!
Submitted by on Jun 30, 2010 - 5:49AM
Don't do it!!!!!!!! Lies, I tell you! BofA just told be they don't plan to start doing that til August 1st...but then told be they have been doing that all along. The web of lies!
Submitted by on Jan 31, 2011 - 9:16PM
BofA is not a pioneer. It their chosen response to a change in federal regulations. Every bank has the option to completely do away with overdraft on debit cards or simply let their customers opt in/out. The new OD regulations did not have to take effect until August 1, 2010. If a customer had not made a decision by that date, they would by default opt out of OD. If a representative of any bank had explained the options clearly, a person would know that even if you opt out of OD protection, you can still overdraft. How? Because unlike most people think, the bank does not decide which transactions to pay first, they actually come through at different times, thus they pay the transactions that come through the account first. Example: With debit cards you can make a purchase at a gas station and the merchant will put a $1 hold on your account if you were to pay at the pump, allowing you to spend more on gas than you possibly have in your account. This hold could stay on your account for days as it is considered pending until the merchant clears their machine. By this time a person could have overspent in several other places and the bank would approve the purchases because of the $1 hold, rather than the actual amount. In this case though, the bank is not allowed to charge the person a fee if they have opted out. There are many loop holes in the new regulations. That is why it is ultimately up to the customer to BALANCE YOUR ACCOUNT FREQUENTLY. You must keep up with receipts and write down every purchase. As internet banking and mobile banking are convenient, they are not always reliable and up to date, as they are programs that can fail. Do banks charge too much for fees? Absolutely. Is it their fault that too many people are irresponsible? No. They do take advantage, but it can all be avoided if people would take responsibility for themselves. I have had fees, but I had no one to blame but myself (and maybe my husband). So stop complaining and keep up with your finances like adults should.
Submitted by on Jun 28, 2010 - 9:25PM
Your right some people have more money than others. I'm one of those that doesn't. So, I make certain that I don't give away my money to bank fees. What I do, is balance my check book often, and it's easy and free on line. Don't write any checks when you know there is no money in your account, and you will avoid these fees.
Submitted by on Jun 29, 2010 - 9:23AM
I whole heartedly agree with the comments made by Dennis Phillip Sous above. Bankers and their computers don't care, it just adds to their bottom line and unless you've got plenty of money in general then they appreciate you and are afraid of you legal strength. The overdraft policies are set up to take advantage of you. In my past experience, a simple balance error set off a chain reaction, the overdraft pay method maximized the amount of charges which can be as high as $35 each, interestingly paying on larger check (let's say $200) and subsequently charging a thirty five dollar fee on four more "withdrawals" of as little as one or two dollars each - effectively wiping out your let's say the original measley $195 balance. Whereas they could have simply paid the smaller checks without any fees being incurred, and then paid the larger check and charged only one fee.
Submitted by on Jun 29, 2010 - 4:35PM
My daughter had this done to her. She deposited her check before the 2 p.m. deadline for that day's deposits and so she went off to the store after double-checking her balance online which showed her her available balance which included the check just deposited. In one day she incurred 5 overdraft fees of $35. Then she was charged $5 per day until she paid off the overdrafts which almost took her whole weeks check she had just deposited. I know Wells Fargo must be missing her by now as she paid everything off and closed her account.
Submitted by on Jun 29, 2010 - 5:15PM
i have been banking at banks for years and i noticed that if are short of funds in oyur back you write out a check or you use your card as a credit and if the money does n't go in your bank right away they bank charges you fees for having a check coming in and the money isn't in there right away this is wrong and when the fees come out it make you more shorter when the money does go inyour back so say you had to rite out a check to feed your family the check has at leat 1 to 2 days to clear you have direct deposite and the cjeck comes ina day ealier the fees come out first then the check sdo they charge you fees and when you paycheck comesd in it takes away your money of whast you thought you had to money you don't have so the fees go higher and higher to where you are 400.00 dollars in the whole and you pay check is 270.00 you still owe your bank fees. then what some banks do is they will give you back some of the the fees but you stuff isn"t covered but also your you still owe the bank plus the money you owe other people. this two has to dstop your trying to feed your family or pay a bill where they don't shut off your eletric so your woing everybody and you can never get back on oyur feet
Submitted by on Jun 30, 2010 - 8:53PM
Several months ago I received a call from someone at Chase Bank he asked about my Visa card, saying late charges was #39.00, then he asked me if I would rather pay $39.00 or $29.99 when I asked what was that for he asked again which I perfer. I thought that was sorta strange but really thought no more of it. I just figured he thought I might go over my limit?
Well last month I let the 9th when my Vise is due slip up on me. When I realized it it was the 9th and after 5 P.M.
I jumped on the computer and put the payment in, it was still the 9th.and it was Wednesday eveing. When my new bill came out I see they only posted it on the 11th Friday. And
sure enough there was that $39.00 charge.
Now I wonder what the earlier phone call was about? Was that some sort of Scam!
Please reply
Submitted by on Jul 15, 2010 - 10:52AM
Hi Pat, we wish we could give your more information on this situation, but we are not a law firm. You can however refer to our attorney referral service. Please refer to http://attorneyconnect.legalzoom.com
Submitted by on Jan 31, 2011 - 7:03PM
I was a Bancorp South customer for a long time until I had an experience similar to some of you. I had made a deposit on a Thursday at about 10 in the morning. I was unaware of any computer related problems so I continued to use my card over the weekend. Next thing I know I have over $600 in overdraft fees all because my deposit didnt go in. TILL MONDAY!!! Even though this was clearly not an issue on my end I still ended up having to pay the overdraft fees minus a 1 time credit of $35. Needless to say I closed my account and will never use Bancorp again.
Submitted by on Feb 1, 2011 - 5:37AM
I am 31 years old and have had a checking account since I was 18 and have never bounced anything. My grandparents have always told me don't spend it if you do not have it. Be aware of your banks rules, for some reason people don't read these and as you read here that is a critical banking error upon your part not the banks. I do think the charges are outragous, but you should always know the game to which your playing.
Submitted by on Sep 23, 2011 - 6:30AM
if the bank charges you an over draft fee and that fee causes you to be over drawn can they charge you another fee on that over draft fee?
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