The Federal Reserve plans to release a rule in the next month that requires banks to get consumers’ permission to charge a fee for paying certain transactions that overdraw their account.
Federal Reserve Governor Daniel Tarullo said that the new regulation would allow a consumer “to know that he or she was opting into a program like this.”
The Federal Reserve has acknowledged that the high overdraft and bank fees are pushing consumers into deeper debt. Overdrawn transactions have long been a profit center for banks, but USA TODAY’s research has found that they’ve now become the single-largest driver of consumer fee income. In 2009, banks are expected to reap a record $38.5 billion from overdraft and insufficient-funds fees, nearly twice the $20.5 billion they stand to collect from credit card penalties.
Large banks, including Chase and Bank of America, have rolled back some of their overdraft policies. This week, Capital One became the latest to do so when it posted a notice online saying it plans to cap the maximum number of overdraft fees that could be charged per day – to four – and not charge a fee when consumers overdraw by $5 or less per day.
Sen. Charles Schumer said regulators’ inaction shows the need to create an independent consumer financial protection agency, which would regulate overdrafts and other forms of consumer credit.
http://www.usatoday.com/money/perfi/credit/2009-10-15-overdraft15_ST_N.htm
Tags: banks, consumer, economy, federal reserve, Overdraft fees
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