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New July Rules: Overdraft Gets an Uplift, No More "Private" Student Lending

July 8, 2010

As of July 1, one of the government’s two student lending programs went the way of the dodo.  AFFIL supported this change, since it will save taxpayers over $60 billion.  Read all about it in this previous post.  All federal aid will now flow through the Direct Lending program, which makes an administrative difference to students and schools, but doesn’t much change the loans themselves.

Also, there are new overdraft changes important to your wallet.  You may have heard from your bank or credit union already, asking you to opt-in to overdraft “protection.”  This is because as of August 15 banks will have to get your permission to enroll you in these programs, whereas before 75% of them just signed you up automatically.  For new accounts, the change went into effect on July 1.

In 2008 banks make almost $24 billion from overdraft loans, so to preserve this cash flow they’re trying to convince you to stay in the program.  But guess what, overdraft loans are a great deal for them, and a bad deal for you.  See why here.

When your bank or credit union asks you if you’d like to enroll in overdraft protection, do the easy thing:  nothing!

Below is CRL’s clever video showing your debit card on overdraft.  (Those of you who were watching TV in the 80’s should get the reference.)  Just say no to overdraft!

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