Bank Overdraft Charges Could Become A Thing of the Past

Have you had a slight miscalculation in your checking account that caused you to overdrawn by just a few cents? Then that mistake ended up costing you $25 to $50 extra?

If so, you're not alone. And consumers are tired of banks gouging them for such small overdrafts.
Ethel Dillon told Consumer Reports about an incident that occurred with her former bank where she was charged $8.00 a day in overdraft fees over a fifty-two cent mistake. Dillon stated, "I realize the shortage was not their fault, but it wouldn't have hurt them to call right away and offer me the chance to make a deposit since I had not over drawn my account before."

Such has been the public outcry about these excessive fees that the Federal Reserve Board (FTR) was seeking opinions from consumers.

One of the proposals made by the FTR was to allow consumers to opt-out of the overdraft protection plans that many banks automatically enroll their customers in when issuing ATM/debit cards.

"[This proposal] would prevent institutions from charging overdraft fees unless they first inform customers and allow them to opt out. The alternative would prohibit charging such fees for customers unless they consent – or opt in – to the program," says Consumer Reports in an article titled The Feds Want Your Opinion on Bank Overdraft Fees.

A second proposal would eliminate overdrafts in cases where funds have been put "on hold" or reserved in excess of the actual amount purchased. Some examples of these holds include hotels, car rentals, and gas purchases. "[These] holds can amount to several hundred dollars and take days to clear, causing customers to overdraw their accounts unknowingly," the article claims.

Consumers were asked to visit the Consumer's Union website and share their opinions by March 30, 2009, with the Feds in an effort to reach some resolution to these outrageous charges. You can read some of the stories by visiting the Consumer Union's website Defend Your Dollars.