Overwhelmed by Overdraft Fees?
Last week, the initial elements of the Credit CARD Act went into effect, as we blogged about here. In February 2010, more consumers protections will go into place, including a rule that requires that credit cardholders opt in to over limit protection plans instead of being automatically enrolled.
For debit card overdraft though, there is still no light at the end of the tunnel; the new rules will apply only to credit cards. Overdraft, as opposed to credit card over limit fees, refer to excessive claims (drafts) on checking accounts, made through debit card use. A recent New York Times op-ed discussed this issue and the problems it causes. Here’s just one of their examples of the ludicrous results of overdraft fees:
“A study by the Center for Responsible Lending, a nonpartisan research and policy group, describes what it calls ‘the overdraft domino effect’. One college student whose bank records were analyzed by the center made seven small purchases including coffee and school supplies that totaled $16.55 and was hit with overdraft fees that totaled $245.”
Now that credit cards are getting better (though still far from perfect), it’s time to focus on other financial products and the way they unfairly target consumers. The Fed sought public comment about overdraft practices earlier this year, and is on the verge of enacting new regulations, which will hopefully offer an “opt in” option.