[infoshare] Consumer Reports Money & Shopping Blog: Don't opt in! Ignore your bank's plea to stay in its overdraft program
- From: "Luis Guerra" <free_speech@xxxxxxxxxxx>
- To: <"Undisclosed-Recipient:;"@freelists.org>
- Date: Wed, 11 Aug 2010 19:53:42 -0400
August 11, 2010
Don't opt in! Ignore your bank's plea to stay in its overdraft program
Under new Federal Reserve rules that become effective this Sunday, August
15, debit card purchases or ATM transactions that would exceed a current
customer's
balance will not be processed unless he or she has agreed in advance to
overdraft protection. If you're currently enrolled in one of these programs
you'll
automatically be opted-out; if you wish to continue you must re-enroll and
provide your signature.
Previously, banks automatically signed up consumers for the service and then
charged them hefty fees whenever it covered an overdraft. Those fees add up
to billions in profits, so as the date looms you're likely to see a lot of
hype from your bank promising you peace of mind by enrolling in its program.
Before you do, remember that there are often
much cheaper ways
to cover transactions that exceed your balance.
Unfortunately, the new rules don't prevent banks from imposing overdraft
fees to cover checks or debits for reoccurring bill payments. They also don't
prohibit
banks from processing transactions in a way that maximizes fees charged to
customers that do opt-in. That was the focus of a California case involving
Wells Fargo. A federal judge ordered it to pay California customers $203
million in restitution on Tuesday to settle claims that it had manipulated
transactions
to maximize overdraft fees. Instead of processing transactions in the order
in which they were received, Wells Fargo put through the largest first,
resulting
in multiple charges instead of just one. The 90-page opinion called the
practice unfair and deceptive, and ordered the bank to stop the practice by
this
November 30. Wells Fargo said it will appeal.
Now Consumers Union is working to ensure that such practices are banned and
these overdraft programs are affordable for those who do Opt-In. Legislation
in Congress will go farther to protect consumers then the Federal Reserve's
Rule, in the following ways:
. Prohibit banks from manipulating the clearing of transactions to
maximize fees.
. Limit the number of overdraft fees financial institutions can charge to
six per year.
. Require fees to be reasonable and proportional to the cost to the
financial institution.
. Clarify that banks must clearly disclose the cost of overdraft fees as
required under the Truth in Lending Act.
-Mandy Walker
URL
http://bit.ly/9bjORM
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- » [infoshare] Consumer Reports Money & Shopping Blog: Don't opt in! Ignore your bank's plea to stay in its overdraft program - Luis Guerra
