New Overdraft Fee Rule: Here’s The Lowdown…

Overdraft fees a huge revenue stream for banks. In fact, US banks will pull in an estimated $38,500,000,000 from this year last year alone (source: Moebs Economic Research). While the banks love these fees, many consumers complain because they say they never opted into them in the first place.

The New Changes & When They Start
On Nov 9th 2009, the U.S. Fed announced their own new overdraft fee reform, similar to how they did with credit cards. Customers will now have the ability to opt out of the ability to overdraw their account using their debit/ATM card. It won’t apply to overdraft fees resulting from auto-deductions you have set up on your account (i.e. auto-payments for power bills, car payment, etc) nor will it apply to checks. Banks will have until July 1st, 2010 to meet this reform.

My Take On It
As you guys can see from my previous blogposts, 95% of the time I side with consumers. However I’m not necessarily in agreement with how they structured the reform. Before you jump on me for saying this, let me explain why:

First of all, I do believe this fee should be waived entirely if it is a rare occurrence for your account. If you are a responsible person and this happens to you, say once per year or so, then you should not be charged a fee. Simple as that.

Rather, I have a problem with the “serial offenders” that are totally irresponsible and don’t pay attention to their balance. For example, I have a friend who I’ll call Chuck (not his real name) and I would estimate that on an annual basis, he overdraws his account at least a dozen times… and it’s not by accident. He will basically spend until transactions no longer go through. Chuck doesn’t bother to actually check his balance or simply (heavens forbid) actually not spend that extra $30 at the bar when he already know his balance his extremely low.

When it comes to people like this… I can’t say I feel bad for them. If anything, the fees are doing them a favor… hopefully they are ridiculous enough to give them a clue that they need to start spending responsibly.

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I disagree I think this is a total win for consumers!

Totally agree. Overdraft fees shouldnt affect responsible people anyway.

Where you take away in one area you have to get from another. This just means lower interest rates on our accounts.