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Article Source: The New York Times
"The final overdraft rules represent an important step forward in consumer protection," the Federal Reserve Chairman Ben S. Bernanke said. "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."
Fed officials said that the banking industry receives $25 billion to $38 billion a year on overdraft fees, including fees for checks and electronic transactions not covered by the new rules.
The rules are aimed at reducing fees for more ordinary purchases, such as at bookstores or coffee shops, where the overdraft fee could be significantly larger than the purchase itself.
Fed officials said the new rules would not cover overdraft fees for checks because consumer studies showed that bank customers are more likely to accept such fees since checks are more typically used for more essential purchases. Nor will they cover overdrafts from recurring debit card transactions, such as to pay for utility or telephone bills that are set up in advance.
...The rules will take effect for new cards on July 1. For existing accounts, issuers will not be able to charge overdraft fees without the permission of the card holder after Aug. 15.
#1 - Thu Nov 12, 2009 12:19 PM ESTAbout time they did something about this.
#2 - Thu Nov 12, 2009 12:42 PM ESTYeah, it's ridiculous how they screw you over with those NSFs. The fees are high and they set it up so that you will be charged with several at once by taking the largest debt first and charging you $40 fees for small items like coffee and lunch.
It should be a crime how they manipulate transactions to cause each customer to accrue the most fees possible. And it's directly targeting the people who can least afford it. But then again, they own the people who can make it a crime...
It should be a crime to spend money that you don't have in your account.
Waht isthis nowe i canet spent moneys thayt arnt mine? Nofare! Itsnot fare banke stops my carde for when I want plasma TVs andf PS3! I dont knowe how much moneys I have in my acount, its not yor busness mister banker!
Stop stoppin me from byin stuff thats not myn yet!
<sarcasm>
I agree there's lot to be said about personal responsibility, but it's a matter of degree. Mistakes happen, and we should own up to our mistakes. But owning up to a $2.00 error should not cost you $200. A bank milking you for every cent they can should not be acceptable conduct.
I agree. I'm just being a dork. I'm no fan of 'ninja overdraft protection' and the like.
I can understand overdraft fees, although I believe your bank should have to lay out in writing exactly how much they will be and how they will be applied. Why can't they create a plan that will charge overdrafts if the account is less than x years old or you have x overdrafts in one year? Honost mistakes would be covered and those who simply can't or won't keep track of their money won't punish those who do.
#3 - Thu Nov 12, 2009 1:13 PM ESTLay it out in writing, huh? Let me tell you: the bank I work for -- Terms and Conditions (supplied with every account): 92 pages, all small point-size and legalese. Then there's the ADDITIONAL Terms and Conditions, the Amendment to the Terms and Conditions and about six other documents. This is so the average person opening up their day-to-day checking account has everything "in writing" so they understand all their fees, obligations, limitations and possibly human rights violations.
The problem isn't understanding or terminology; the problem is base greed and people who'd do anything to get richer; up to and including sacrificing everyone else in the country.
Mine started odd practices this past year. Normally debit card transactions show up almost immediately as an authorization. If your balance falls below around $200 now they will sometimes leave off an authorization until it actually posts. In the meantime, if you lose track and don't notice, it appears that you have more money than you really do. My dad is in his sixties, and a little uncoordinated after a large amount of heart attacks and didn't notice one they left out. It cost him big.
Then there's the new practice where they charge you overdraft fees on things that have already cleared and posted if outstanding authorizations are more than the current balance. They also charge fees on the authorization, and then again when the transaction posts. I found this one out when they double charged me on three transactions from three different vendors. I never did get all of the fees removed even though they did reverse the duplicate charges.
After working at a credit card company I can promise you I'm big on reading things but I really don't remember ever seeing anything indicating they were going to play those kinds of games with my money.
Ouch! Glad I bank at a small, locally owned bank (yes, they call me by name when I walk in). Guess I better keep my usual eye on my account anyway.
Lol my friend has been beating me over the head for a few years about how much better his little credit union is. Small, friendly, etc etc. After his credit union opted to cancel his overdraft (the real kind) program and go with overdrawing, he's been awfully quiet.
This legislation does nothing. If the customer does not agree to the terms the bank will simply deny or close the account. Everyone who has an account is aware of the overdraft fees incurred when .10 cents more than what is in the account is spent, so just making a rule that says the bank has to explain it more clearly is a waste of time.
What really needs to be done is legislation to limit the amount that the banks can charge. US Bank currently charges something in the neighborhood of $35 OD fee, and an additional $8 a day fee until the account is brought back to a positive balance. That means that a ten cent difference can cost a customer $59 in one weeks time. There should also be rules regarding the amount the account is overdrawn before fees can be assessed. That would be helpful, this current legislation is nothing more than a smoke screen.
#5 - Thu Nov 12, 2009 2:09 PM ESTIt should be just like when you use an out-of-system ATM machine. It should tell you that if this transaction goes through there will be a fee of $X amount - do you with to continue? Then it is up to the user if this is important enough to warrant the fee.
#6 - Thu Nov 12, 2009 2:15 PM ESTMy first thought was if we would just nationalize the banking system that the overdraft fees alone would pay for a third of our health care reform...
#7 - Thu Nov 12, 2009 2:19 PM ESTHow about this unique idea? If you are trying to debit more than is in your account, the bank denies the transaction! That way, you aren't charged any overdraft fees, and maybe, just maybe, you learn to keep track of the balance on your debit card.
#8 - Thu Nov 12, 2009 3:03 PM ESTCorrect Sherry ! the "right" overdraft fee is loss of your privilege to remotely access your account
#9 - Thu Nov 12, 2009 3:36 PM ESTIf you're going to spend money that you know you don't have and you willingly enter into an agreement with an entity that's willing to cover you, for a fee, then, exactly what is the problem? Degree and reasonableness? Yes, I can go along with that. But what are we coming to when good and intelligent people are actually indignant over their so-called "right" to overdraw their accounts but not credit card companies' "right" to make a profit off of such consumer willingness. Geez.
#10 - Thu Nov 12, 2009 5:30 PM ESTI am so sick of people thinking that the banks are bad-and people shouldn't take personal responsibility.
Don't spend money you don't have!! Stop bitching about things that are your OWN FAULT! This has become such a society that blames everyone else for their own faults.
Banks are not NON-PROFIT BUSINESSES! They have never claimed to be. If you spend money you don't have, you will get charged for it. Plain and simple!!! Buck up and own up to your own freaking mistakes! Not everything needs to be blamed on the "big bad business".
#11 - Fri Nov 13, 2009 10:20 AM ESTSo in your opinion, banks are doing nothing wrong? It's ok to take billions of dollars to give out loans, not give out those loans but instead use that same money for bonuses and buying other companies; then raise interest rates on the public, raise NSF fees, and institute other ambiguous fees? You have no problem with banks manipulating how transactions post in order to maximize fees for people -- the people who can least afford it?
I believe that most banks are not doing anything wrong, that is correct.
If your second sentence is referring the TARP funds-then the banks were told they were "doing their patriotic duty" to take that money. Some of those banks-didn't even need the money. Not all banks were contributing to the lending problems that affect us today-so please remember that.
They can have bonuses-do I think they are high? Sure-but it isn't my decision to make-it is up to the company.
As for the fees that are being charged-everyone knows that banks charge fees. It is your responsibility as a consumer to shop around if you don't want to pay them. It is up to you to be responsible for your own actions, and not overdraw your account. It is up to you to know what you are doing. It is up to you to be informed-ask questions, and be responsible.
There is no need to keep blaming banks. It is so easy to do, isn't it? "I went negative-must be the fault of the bank"; sure hope you enjoyed that drink you just paid $40 for! Your fault-you didn't have the money-you pay.
Whether or not you can afford the fees isn't the issue-you shouldn't have made the purchase that you can't afford. That doesn't even need to be applied-it isn't logical.
As for manipulating how transactions post-once again-don't write checks you don't have the money for. Just because your mortgage check clears first-doesn't excuse the fact that you didn't have money to go to McDonalds. Balance your check book.
TAKE RESPONSIBILITY!
I wonder how you can work for someone you detest so much? Aren't you then contributing to what you see is the problem? The big bad banks?
How can I work for a bank? That's easy, I'm a whore and have bills (oh yeah, the bankers ruined the entire economy so you may have noticed a little spike in unemployment in the last year). Am I contributing to the problem? Yes, I am. How do I feel about it? I drink a lot, as you also know. ;)
You also know that only 14 banks in the country were "required" to receive TARP funds; ours was not one of them. Banks are LYING if they say otherwise. And if they were being so patriotic, why didn't they give out any loans with that money -- that would have confirmed their bull@!$%# patriotism (which is a bull@!$%# concept to begin with, but that's something else entirely). I also know -- as you should -- that our bank begged to return the money they voluntarily accepted; on the same day they repaid it, the board of directors granted raises to the executives -- yeah, they are really looking out for the little people with their awesome sense of community and patriotism!
I am not saying people don't need to take responsibility. But on the other hand, shouldn't banks be required to post items in the order you spent your money? How is it fair for them to create a situation in which you expected to see one NSF but instead see four or five?
The bankers ruined the entire economy? Wow.
Banks did give out loans-however-you can't give out loans if people can't pay them back. Be reasonable. Oh wait-I suppose you find fault with that to, huh? We should just hug everyone, and say "oh, it is ok that you messed up, we will hold your hand, and take care of everything for you, don't worry-you don't have to pay us back, we are the bad guys, we will just call it even". WTF
Why shouldn't our bank have returned the money??? We didn't need it. WTF? You didn't want them to take it, now you didn't want them to return it? Really? Does that make sense?
What is wrong with the board getting a raise? We are doing well as an institution, therefore-as it works on Wall Street, when you do well-you get rewarded. That is fine-and there is nothing wrong with that.
Really? Cmon now. Everyone -- even Republicans -- can admit that bankers' unbelievable greed and deception ruined the economy. Everything else we're just never going to agree on....
Grr! I thought we were moving on to torture now!!! :)
Nope-I don't agree. Now-can I say that some lending practices that some institutions participated in CONTRIBUTED to the decline? Of course I can! They didn't do the whole thing themselves though.
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