Posts Tagged ‘ Excessive Overdraft Fees ’

How New Overdraft Protection Rules Don’t Protect You

August 16th, 2010. By Kristine B

So as of August 15, new banking regulations went into effect for overdraft protection—meaning you are no longer automatically opted-in for overdraft protection. That’s good news, because it could save you some money. The bad news is that the protection doesn’t extend to ALL overdraft transactions. Making matters worse, some banks (okay, many banks) are trying to convince customers to sign up for overdraft protection. Because this is the first week for the new overdraft protection regulations, this week’s Pleading Ignorance looks at the new regulations, how they affect you and why banks still want you to sign up.

First, though, what is overdraft protection? Overdraft protection is a way of allowing a customer’s transaction to proceed even if the customer doesn’t have enough money in his account for that transaction. If you buy a $10 lunch but only have $5 in your account, without overdraft protection that transaction will be denied. But if you have overdraft protection, the bank will authorize the payment.

The catch, though, is that overdraft protection can be expensive—up to $35 per transaction. So, that $10 lunch winds up costing you $45. Worse, you may not realize you were enrolled in overdraft protection. Some banks automatically enroll customers in the program. So you might have expected that the transaction would be denied (hopefully, you have a back-up plan for payment) but it was approved—complete with fees.

Making matters worse is that the banks have been accused of reordering Read the rest of this entry »

Tags: Excessive Overdraft Fees, Pleading Ignorance
Posted in Consumer Fraud, Pleading Ignorance | 1 Comment »