Kip Tips
A New Ban on Overdraft Fees
The Federal Reserve is providing more protections for consumers.
By Cameron Huddleston, Contributing Editor, Kiplinger.com
November 13, 2009
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Starting next summer, banks won't be able to charge overdraft fees on ATM and debit-card transactions unless you opt in to an overdraft-protection service.
The Federal Reserve announced the ban November 12, and it will take effect July 1, 2010. Banks will have to provide customers who don't choose overdraft protection for ATM and debit-card transactions the same account terms and features (including pricing) as they provide to customers who do opt in, according to a press release from the Federal Reserve.
"While this overdraft ban will be good news for some consumers, banks will try to find new ways make up for the lost revenue," says Bill Hardekopf, chief executive of LowCards.com. Many banks already have rushed to raise interest rates and fees on their credit cards before a new law that provides more protections for cardholders takes effect in February 2010. See What Has Your Card-Issuer Done for You Lately? to learn more about changes cardholders are seeing.
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Reader Comments (5)
Posted by: Chris Reich, Business Speaker at 11/14/2009 11:49:38 AM
Now Congress needs to regulate the credit card business. I would propose that once you enter a contract with a credit card company, say for 7%, then that rate ought to be the rate regardless of late or missed payments. The issuing card company company could suspend the use of the account in retaliation. And, I would let them raise rates no more than 2% ANNUALLY. That gives the consumer time to get out or pay off. I'm very disappointed that Chris Dodd doesn't have the guts to stand up to the credit card issuers. And Joe Biden? Because many credit card companies have a safe haven in Delaware, he left them alone for 30 years. Sure, credit fuels the economy. But credit also fools the economy. We spent $2 trillion pulling out of an economic ditch and no one will say the Clinton growth was a false positive (dot com bust?) and the Bush economy was a false positive. It's time to face the reality that the U.S. economy is retracting from loss of its manufacturing base---the recent uptick in productivity is also false as it was funded by government money. US companies can produce here, create jobs here and build a strong base here. But most management is too short-sighted. Move to Mexico, save a buck, look good for a couple quarters. But in moving the jobs, we are also starving the consumers needed to sustain the very companies who view their workers as the enemy. Too bad. It doesn't have to be that way.
Posted by: BERDIE at 11/15/2009 03:03:14 PM
I THINK THIS IS GOOD BECAUSE WE LIVE ON A FIXED INCOME AND WE GET OUR CHECKS DIRECT DEPOSIT AND WE WRITE ONE CHECK PER MONTH AND IF WE HAVE TO USE THE OVERDRAFT WE ARE CHARGED $30.00 EACH MONTH WE USE IT.
Posted by: Travis at 11/16/2009 02:50:49 AM
Finally. One more banking scam ended.
Posted by: Bob at 11/16/2009 11:38:45 AM
Don't give our government credit for helping the average consumer. I warned last year that by giving the credit card companies so much time for new rules to go into effect would result in one last big rip off and much higher costs after the deadline. I have also noticed that new credit card applications give the companies permission to make changes at any time WITHOUT notice. The same applies here. What is being touted as consumer protection is nothing but a huge deception. So far the only good program to come out of Congress was "Cash for clunkers". It was good for the environment, fuel mileage, and the economy. Notice how quickly it was yanked from the the public when it showed signs of success. At only $3 billion it was less costly than the $3.6 billion paid in bonuses at just one bailed out bank.
Posted by: tired of the bs at 11/16/2009 12:13:40 PM
Here is an idea--don't spend money you don't have. I know this is radically different than the government, but how about some personal accountability?