Fed Takes Away Banks' Debit Card Overdraft Fee 'Cookie Jar'

Many banks allow consumers to spend more on debit cards than they have in their accounts, but then charge large overdraft fees. Read More...

Thu, 11/12/2009 - 8:38pm
Posted by Naran

Fed: banks need customer consent on overdraft fees

November 12, 2009 11:42 AM

WASHINGTON (AP) — The Federal Reserve has issued a new rule that will prohibit banks from charging overdraft fees on ATM and debit card transactions unless a customer allows it.

Many banks allow consumers to spend more on debit cards than they have in their accounts, but then charge overdraft fees of $25 to $35, even on small transactions that cost much less.

The Fed's rule, which will take effect July 1, requires that customers agree to have their overdrafts covered before the fees can be levied.

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