Thursday, September 10, 2009
(graphic: personalmoneystore.com)
Overdraft fees have become a lucrative business for banks, especially in recent times when consumers easily run short of cash in their checking accounts. Banks are expected to reap $27 billion in overdraft charges on ATM card transactions alone this year, plus another $11.5 billion in fees stemming from bounced checks and other similar transactions. Banks like Wells Fargo and Bank of America levy a fee of $34-$35 to cover each ATM purchase that exceeds the amount available in a checking account—even if the purchase was as low as $1.
Consumer anger over what many believe are excessive overdraft fees has led Congress and the Federal Reserve to consider proposals to reign in this aspect of the banking business. Representative Carolyn Maloney (D-NY) has introduced legislation that would require consumers to be warned when a debit card purchase will overdraw an account, and to prevent banks from processing the most expensive purchases through accounts first so as to create extra overdrafts.
The Fed is considering requiring banks to get permission from consumers before enrolling them in overdraft programs that automatically lead to $30 charges.
-Noel Brinkerhoff
Overspending on Debit Cards Is a Boon for Banks (by Ron Lieber and Andrew Martin, New York Times)
Comments