The Federal Reserve released a long-awaited rule Thursday requiring banks and credit unions to get consumers’ permission before charging steep fees to pay debit card and ATM overdrafts.
Fed Chairman Ben Bernanke in a statement said the new regulation “represent(s) an important step forward in consumer protection.”
The final rule, which comes amid intense congressional scrutiny of bank overdraft practices, will take effect by July 1, 2010, for new customers and Aug. 15, 2010, for existing customers. The Fed released a preliminary rule on debit card and ATM overdrafts late last year, but didn’t say then if it would require banks to get consumers’ consent before signing them up for these programs.
Consumer advocates also criticized the Fed rule, saying it doesn’t go far enough to curb overdraft fees that are pushing some people into financial turmoil. The regulation, for instance, doesn’t restrict fees charged by banks for overdrawn checks and recurring debit card transactions, such as monthly bill payments.
Some experts warn that as regulators restrict certain practices, banks will just find new ways to make money off vulnerable consumers.
http://www.usatoday.com/money/industries/banking/2009-11-12-fed-overdraft-rule_N.htm
Tags: federal reserve, Overdraft fees
Do you Want to say something?