New regulations to protect consumers in financial transactions and remove power from banking regulators will go into effect this February, but some members in Congress are seeking immediate action in areas including credit cards and overdraft fees.
A majority of banks automatically offer overdraft loans to all account holders, but do not notify customers when an overdraft is about to occur, nor do they offer the customer the option to cancel the transaction. In fact, banks sometimes process transactions in ways that increase the chance of an overdraft by debiting large transactions before smaller ones, to exhaust funds more quickly.
This year, average overdraft fees that large banks charge increased 4%, and its estimated that banks will make $38.5 billion off the fees this year, according to Moebs Services.
Sen. Christopher Dodd, plans to introduce a law requiring banks to get permission from customers, instead of having overdrafts occur automatically- so if a customer declines, the transaction would be rejected if they try to overspend. Another proposal would make the fee proportional to the overdraft loan.
Do you Want to say something?