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Banks Under New Regulations Regarding Overdraft Fees

Posted by: RateAPY Bank Rates News
March 4th, 2010

More and more, consumers are using their debt cards for purchases instead of paper checks or cash. Debit cards work a lot like a credit card, only the purchase amount is immediately deducted from the customer’s checking account. If there is an insufficient balance in the checking account to cover the purchase, banks usually approve the transaction and overdraw the account. Banks charge between $20-$35 for a single overdraft fee. This means a $2 cup of coffee could cost $37.

Banks Must Offer Customers Option to Decline Automatic Overdrafts

The Federal Reserve is trying to better inform and protect consumers. Recent changes to banking regulations allow customers to opt out of automatic approvals for overdraft transactions. Instead of being approved to purchase the $2 cup of coffee, the transaction would be declined at the point of sale. This could be embarrassing, but much cheaper!

Open a savings account today. Savings accounts that are linked to your checking account for overdraft protection are one of the best ways to save on overdraft fees.