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Now Is Your Chance to Speak Out Against Overdraft Fees

The Federal Reserve Board is asking for comments from ordinary citizens like you and me on two proposals aimed at lowering unexpected overdraft fees.

The proposals tackle the fact that financial institutions have been known to automatically enroll customers in overdraft programs that charge a fee whenever customers exceed their account balances. Instead of preventing the transaction from going through, banks allow the overdraft then charge you a whopping $10 to $38 per transaction. Just what you need when money is tight, right?

Of course, many people benefit from overdraft protection, but these proposals address those who were unknowingly signed up for the service. One proposal is to prevent institutions from charging overdraft fees unless they let customers know first and offer the chance to opt-out.

You can file a comment before the March 30 deadline on the Consumers Union website.

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kscincotta kscincotta 7 years
My issue is when the bank clears simultaneous payments in an order that increases the likelihood of incurring overdraft charges.For instance, I participated in the Breast Cancer 3-Day last year and a number of my donors made their checks out to me personally rather than to the charity. Rather than have them re-write their checks, I just wrote out checks in the same amounts from my account, attached a donation form in their name and deposited their checks in my account. On one such occasion, I did this for something like ten checks in one evening, two or three of which were sizable. All of those checks were processed at the same time, both by the 3-Day and by Bank of America. Because I had some other incidental purchases and it was towards the end of the month, I knew it was going to be tight to have all those checks cash and it was hard to plan for because it can take up to six weeks for the checks to go through. However when the checks finally went through, BoA processed the largest checks first. Eventually, I overdrafted (my fault, I know, but stay with me). For each check that went over, they charged me an overdraft fee of $35 immediately, thus causing me to go further in debt. Then each additional check of course was over the limit, so each of those accrued an overdraft charge. In the end, I was out over $150 bucks in fees!Now, had they processed all of the little checks first, only 1 or maybe two of the bigger checks would have been over the limit, rather than five, thus saving me tons in fees.I am not saying that I shouldn't have been penalized. That's fine. What's not fine is that BoA strategically did this to maximize the number of fees that I was charged which is totally bogus to me.
kscincotta kscincotta 7 years
My issue is when the bank clears simultaneous payments in an order that increases the likelihood of incurring overdraft charges. For instance, I participated in the Breast Cancer 3-Day last year and a number of my donors made their checks out to me personally rather than to the charity. Rather than have them re-write their checks, I just wrote out checks in the same amounts from my account, attached a donation form in their name and deposited their checks in my account. On one such occasion, I did this for something like ten checks in one evening, two or three of which were sizable. All of those checks were processed at the same time, both by the 3-Day and by Bank of America. Because I had some other incidental purchases and it was towards the end of the month, I knew it was going to be tight to have all those checks cash and it was hard to plan for because it can take up to six weeks for the checks to go through. However when the checks finally went through, BoA processed the largest checks first. Eventually, I overdrafted (my fault, I know, but stay with me). For each check that went over, they charged me an overdraft fee of $35 immediately, thus causing me to go further in debt. Then each additional check of course was over the limit, so each of those accrued an overdraft charge. In the end, I was out over $150 bucks in fees! Now, had they processed all of the little checks first, only 1 or maybe two of the bigger checks would have been over the limit, rather than five, thus saving me tons in fees. I am not saying that I shouldn't have been penalized. That's fine. What's not fine is that BoA strategically did this to maximize the number of fees that I was charged which is totally bogus to me.
Spectra Spectra 7 years
ylovely--Oh, I've been there, trust me. I'm just saying I've learned from my mistakes. I had one overdraft in my life...I had rent due and I also had to buy groceries. I miscalculated how much I had in my account and my bank did indeed charge me the $30 fee, but I didn't blame it on anyone else or the bank...it was MY fault for trying to spend money I didn't have. I can see overdrawing your account once or twice if you're strapped, but if it's a continual thing, you need to re-evaluate your spending habits.
ylovely ylovely 7 years
Spectra I hear what your saying but it's easy to judge when you haven't been in shoes of those who don't have the option of having a $ 500 cushion. Again I've dealt with both sides. A little empathy goes far.
ylovely ylovely 7 years
I've worked for two different banks and this behavior is pervasive. The last bank I worked for was shameless in how they posted items to customers accounts. They did it in such a way that several fees would occur when items posted. It was so difficult to talk with the many customers who would call baffled at the fees either from their over draft protection or from over draft fees. My own sister was a victim of their tactics.
Spectra Spectra 7 years
How about this: don't overdraw your account! Seriously, how difficult is it to monitor your checking account balance? I overdrew my checking account exactly once and I was so embarrassed about it that I vowed to never do it again. I just keep track of my balance and I ALWAYS keep a $500 cushion, which is very important. I don't get people who let their checking accounts get to the almost-empty mark before they put money in. That's an overdraft waiting to happen.
aimeeb aimeeb 7 years
I wonder if I am automatically enrolled...hmmm. I rarely run into an over draft problem though.
ilanac13 ilanac13 7 years
i have to say that i'd rather pay a small over draft fee as long as my check clears. i have over draft protection on my account, and there are times that i have a bill that's due, but my direct deposit won't post until the next day. i'd rather deal with a slight fee like $10 or so than to have issues with my credit because of a missed payment.
prettywarrior prettywarrior 7 years
This is great, I hope it actually works. It drives me crazy that the bank can charge fees for each overdraft, when it can sometimes take DAYS to transfer money electronically from one account to another. WTF.
margokhal margokhal 7 years
This is great. I hope they actually LISTEN, though. My worst overdraft story: I had to pay my hairstylist, landlord, and my GRE fees in the same week. I *did* have enough money in my account for all the transactions [I started a transfer from my savings on the Friday before just in case], and I explained to my hairstylist that a lot of money was going in and out that week and not to cash my check bill until two days later, which she understood and agreed to. My landlords also understood about being a college student, and they had explained to me when we signed the lease that they wouldn't cash checks until a week after they were due, just in case our pay schedule wasn't on the 1st of the month and so they didn't have to return checks. They had held up to that statement until this time. Well, when I got my statement for the month, I had $100 in overdraft fees PLUS being almost $1400 in the hole! Turns out - my landlords, being terrible people, didn't cash in my rent check from LAST month, so they cashed them BOTH at the same time that week - $1200!!! I got charged $25 for each check! Then the GRE payment came - $140 PLUS $25 in overdraft...THEN my hairstylist decided to cash her check the SAME day as the big landlord fiasco - that was another $25! Of course I was livid, and after calling the bank I found out I had been automatically enrolled in these overdraft things when they had updated some other service - apparently they sent an email about going to a link to READ about the changes, but I certainly can't find that email. Only THEN did I find out that I could set "alerts" so that I would know when my account was running low. Obviously they charge for the text message/phone call sent - but I haven't overdrafted since! And now I am really really obsessive about my accounts. They SHOULDN'T LET THE CHARGE GO THROUGH if all the money isn't there!
margokhal margokhal 7 years
This is great. I hope they actually LISTEN, though. My worst overdraft story: I had to pay my hairstylist, landlord, and my GRE fees in the same week. I *did* have enough money in my account for all the transactions [I started a transfer from my savings on the Friday before just in case], and I explained to my hairstylist that a lot of money was going in and out that week and not to cash my check bill until two days later, which she understood and agreed to. My landlords also understood about being a college student, and they had explained to me when we signed the lease that they wouldn't cash checks until a week after they were due, just in case our pay schedule wasn't on the 1st of the month and so they didn't have to return checks. They had held up to that statement until this time. Well, when I got my statement for the month, I had $100 in overdraft fees PLUS being almost $1400 in the hole! Turns out - my landlords, being terrible people, didn't cash in my rent check from LAST month, so they cashed them BOTH at the same time that week - $1200!!! I got charged $25 for each check! Then the GRE payment came - $140 PLUS $25 in overdraft...THEN my hairstylist decided to cash her check the SAME day as the big landlord fiasco - that was another $25! Of course I was livid, and after calling the bank I found out I had been automatically enrolled in these overdraft things when they had updated some other service - apparently they sent an email about going to a link to READ about the changes, but I certainly can't find that email. Only THEN did I find out that I could set "alerts" so that I would know when my account was running low. Obviously they charge for the text message/phone call sent - but I haven't overdrafted since! And now I am really really obsessive about my accounts. They SHOULDN'T LET THE CHARGE GO THROUGH if all the money isn't there!
TidalWave TidalWave 7 years
Usually, I would want the transaction to go through and don't care about the extra fee. Sure, if it's just for a $5 transaction then no I don't want to be charged $30; but if it's a matter of filling up my gas tank or paying a bill -- then I would rather have that transaction go through than be stuck there without having a way to pay for anything...
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