Sick of Unfair Overdraft Fees? Tell Us About It!
By Consumers Union on Tuesday, June 18th, 2013
Have you paid a fee for an unfair overdraft?
We want to hear your story about being slammed with overdraft fees (tell us about your experience here) so we can get a new bill moving in Congress that will protect consumers from this unfair practice. Several readers have already shared their experiences, like John of LeMoyne, PA:
“I have had too many overdraft charges to count, and some were for an amount less than one dollar. . . . Sovereign told me that their policy is, on any given day, to pay out the largest item presented to them, and then pay out the next smaller item, and so forth, until all checks, debits and charges are processed. And as we all know, if you have $50 in your account and the first item presented for payout is $45, that leaves $5 to cover everything else, so that’s a recipe for disaster.”
Stories like these are why Representative Carolyn Maloney (D-NY) recently introduced legislation in Congress that would limit the fees that banks can charge on overdrawn ATM and debit card purchases. Help us stop unfair overdrafts by sharing your story.
The Federal Reserve requires banks to obtain their customers’ approval before signing them up for overdraft programs that cover debit purchases and ATM withdrawals. The proposed legislation would give you further safeguards if you chose to opt-in to a bank’s overdraft program.
Key provisions of the bill include:
- Overdraft fee policies must be transparent and fully disclosed;
- The fees themselves must be “reasonable and proportional”;
- Purchases and withdrawals must be debited in a logical, clearly-disclosed way. Some banks have been found to manipulate the order they process transactions to maximize the fees they charge.
Consumers Union strongly supports these reforms. A recent report from the Consumer Financial Protection Bureau (CFPB) showed that consumers in 2011 who opted into the programs spent, on average, $168 more per year in fees than other customers.
And banks profit enormously from these programs. According to the same report, banks make about 60 percent of their fee revenues from checking accounts through overdraft charges, even though less than a quarter of all customers have opted in.
We’re working hard to get this bill passed. In the meantime, consumers can protect themselves from overdraft fees by following these tips from Consumer Reports.
Have you experienced a problem with excessive overdraft charges? Please share your story!