Federal Reserve Considers Changing Overdraft Fee Rules

Bank fees are taking a bigger chunk out of many people’s checking and savings accounts these days. But the Federal Reserve is considering a proposal that would give customers the right to decline overdraft protection for ATM withdrawals or debit card purchases. If the rules change, customers would have to opt-in to allow overdraft protection.

Overdraft fees vary from bank to bank, but tend to run about $10 to $38, according to Boston.com. So if you make several purchases the same day, you could be hit with a fee for each transaction.

About 81% of banks allow overdraft fees to occur with debit card and ATM transactions, according to a Federal Deposit Insurance Corporation (FDIC) survey. But many banks surveyed said they did not inform customers that there wasn’t enough money in their accounts to process transactions. About 8% of the banks surveyed let customers know they had insufficient funds, giving them the chance to end the transaction and avoid overdraft fees.

So what can you do in the meantime to avoid getting hit with overdraft bank fees?
—Track your spending and balance your checkbook each month.
—Sign up for your bank’s free alert service that notifies you when your account balance is low.
—Only use your bank’s ATMs to avoid being charged extra fees.
—Try to limit taking cash out of an ATM machine to once a week or less frequently to avoid problems.
—Pay attention to the available balance on your account when visiting the ATM or viewing your account on line. There may be pending transactions that have not yet cleared.
Wait for your paycheck to clear before writing checks against it.

The best way to avoid overdraft fees is to never spend more than you have in your bank account. Keep careful records of all your withdrawals, purchases, and deposits to make sure you know exactly where your money is going.

This entry was posted on Friday, April 3rd, 2009 at 2:20 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.