WaHOO! Fed bans overdraft fees on ATM & debit-card transactions

[ProSense]

WaHOO! Fed bans overdraft fees on ATM & debit-card transactions

by Eileen B

Well, strike one for the little guy. It became a little harder for banks to screw poor people today, and I'm thrilled.

The Fed bans overdraft fees on ATM and debit-card transactions

The rule, to take effect July 1, requires banks to get customers' OK for the fees, which have been a growing source of profit for banks. Those who decline will see transactions rejected.

<...>

LA Times, By E. Scott Reckard November 12, 2009 | 12:40 p.m.

Flexing newfound muscle as consumer protector, the Federal Reserve today banned overdraft fees on automated teller machine and debit-card transactions unless consumers have actively opted for an overdraft protection service.

The new rules mean that banks will be required to get their customers' permission before charging fees when debit-card and ATM transactions trigger an overdraft. Customers who don't elect to have overdraft coverage will see their charges rejected if they put their bank accounts into the red.

Consumer advocates lauded the move as long overdue but said stronger measures contained in pending legislation introduced by Democrats were needed as well.

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"The Fed should be applauded," said Lauren Bowne, staff attorney for Consumers Union, which had argued that the overdraft charges were really a form of high-interest loans. "Soon, banks will have to persuade their customers that these overdraft programs are beneficial compared to other lower-cost alternatives."

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[spanone]

1. change....k&r

[katandmoon]

2. So banks only have 7-1/2 months left to screw customers!

[vadawg]

4. rofl, i thought for a second there it was july of 09, was trying to figure it out

but alas its 7 and a half months into the future...

[imdjh]

5. Now, now, we have to let them pretend that there is some work in making it so.

In reality, they have to do some things according to older rules, and as a notification would amount to a change, I suppose they actually do have to have time to send out the notice in writing, allow sufficient time to respond, allow time to make all those manual individual changes, and then some time for something else.

[katandmoon]

15. Yes, whereas they SCREW customers instantaneously, it takes them months'n'months to UNscrew us.

[ProSense]

7. Yesterday you were faced with being screwed forever.

Something changed, be a little happier.

[Thrill]

3. Why does it take so long to start? July?

That gives them plenty of time to figure out how to screw people to make up the difference

[ProSense]

6. I don't know, but I could see someone

asking the same question if it started in March. Right now, I'm glad the policy is being implemented.

[AllentownJake]

9. Simple answer

Compliance lag, if they told banks they had to comply tommorow, the banks would have to send a mailing to customers and update systems, train staff, etc overnight.

That being said 7 months is a long compliance lag time. March would be more realistic seeing that the systems are already set up for this and the real issue is staff training and a mailing.

Plus it would boost hiring because a temporary work force would be needed to process the compliance requirement.

[AllentownJake]

8. They are giving the banks an obscene amount of time to prepare for compliance

I.E. update systems and prepare a mailing.

[virgogal]

10. So what's overdraft protection service? Will it cost?

[Withywindle]

11. Wow. Much appreciated good news.

Everytime a thread comes up about this on DU, you always get some bootstrapper assholes saying, "Well, it's not so hard to balance a checkbook, personal responsibility, yap yap yap..."

Not willing to even hear it when people speak up about how banks will HOLD deposits until after a whole bunch of penny-ante ATM charges that WOULD have been covered by the check, go through, to justify charging the person $35 on every single one of them, which adds up FAST to maybe a couple hundred dollars that's pocket change to a wealthy person but catastrophic to someone struggling. How banks sometimes put a totally ridiculous hold on funds above and beyond the amount charged, again, so as to have an excuse to charge people fees.

Obviously, this hurts the working poor the most. If you're just barely getting by and have a job, enough that you can barely afford a bank account, and have to monitor it carefully, they WILL find an excuse to stick their hands in your pockets and take what little you have. It's a lower-middle-class/working-class/working-poor version of the Poor Tax that really destitute people have known about for years and years.

[wildflowergardener]

12. Fees

I know I was upset one time when my ATM allowed me to withdraw money below my balance. I quickly put the money back - re-deposited it, and called them, and they didn't charge me a fee - I'd had a mistake where someone had withdrawn an electronic fee twice so my balance was much lower than it should have been - I never dreamed at the time that the bank would allow you to take out more than you had with your atm card - very sneaky way of tricking people into paying them fees - so this is a great thing.

[ProSense]

13. Exactly,

I remember the days.

[FLAprogressive]

14. now when will we get some transparency on what the fed is doing. they're not angels either

[chill_wind]

16. Well strike me with a feather! This is very much needed. Good to see it.

knr.

[cbdo2007]

17. This is great. Now we can go back to not paying attention to how much money is in our accounts!!