New rules presented for overdraft protection - Bills.com News

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New rules presented for overdraft protection

Friday, Nov 13, 2009
By Jennifer Hewitt

Given the economic times, many consumers are probably concentrating on debt relief.

Now, with new rules from the Federal Reserve, doing so may be a little bit easier. The rules pertain to banks and how they handle overdraft protection services and will require that they get their customer's permission before enrolling in them.

"Both new and existing account holders will be able to make informed decisions about whether to signup for an overdraft service," Ben Bernanke, chairman of the Fed, said.

Many banks would automatically enroll people in overdraft protection services, which charge people a fee when they commit a transaction yet do not have sufficient funds to cover it. Banks will allow the transaction to go through, rather than have it denied.

Consumers, and members of Congress, have expressed their displeasure with the overdraft fees, which can often come in at a high amount despite the fact that the transaction can be small. Furthermore, consumers can be charged for multiple transactions,
which leads to fees stacking up.

Along with giving consumers a choice regarding the programs, the new rules will ensure consumers aren't penalized by banks for opting out. The new rules take effect July 1 of next year.

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