I haven't been keeping a close eye on the national debate about reforming banks' outrageous overdraft fees, so when a letter arrived from my credit union this month saying something about the overdraft laws changing, my main response was... what? I know that banks make a bundle off the fees ($26 billion a year, actually). And I know that I hate overdraft fees with a fury normally reserved for TicketMaster, but since I cancelled my Bank of America account in January and switched to a credit union, I wasn't sure whether the new rules were good for me, bad for me, or even applied to me.
- OSPIRG's Jon Bartholomew. And his money.
Q: So what are the rules exactly? Can you just give me a rundown on what they actually mean? Well, first off a new rule came into effect last weekend that says banks can no longer automatically put you into their overdraft program for debit cards and ATMs.
So let's say you have $10 in your account and you go to try and get $20 out of an ATM. What banks have been doing is putting you into a program where they'll give you your $20 from the ATM, but then they'll hit you with a $30 fee. What used to be the case in the past is that you just wouldn't get your $20. That's the situation people will be in now if they don't opt in to the overdraft program. The new rules don't apply to checks, so you will still get a $30 fee if you write a check and it bounces, or if you have an automatic withdrawal and there's not enough money in your account, but you won't be dinged for withdrawing too much on an ATM and debit cards.