Good news for anyone who has unwittingly gone over their bank account spending limit and been hit with a substantial fee – new overdraft rules are in place to protect consumers.
Effective July 1st banks can’t sign customers up for overdraft protection without permission on ATM withdrawals and debit cards. This means that if there’s no money available, none can be taken out.
“The Federal Reserve’s rules are a good first step, but they don’t include all of the protections that consumers need,” said Jean Ann Fox, director of financial services for the Consumer Federation of America.
She says consumers need to say no to sales pitches for costly full overdraft protection.
However, overdraft protection has many advantages according to Rodney Brown, president and C.E.O. of the California Bankers Association.
“It may be a very significant bill such as a mortgage payment that you wanted processed on time, so there are no late penalties or adverse consequences to your credit score,” said Brown.
A fight is shaping up over proposals to strengthen consumer protections.