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photo credit: squidpants
Starting July 1, banks won’t be able to charge bounce fees on ATM or debit card transactions unless the customer has opted in to an overdraft service, the Federal Reserve announced today.
Bounce fees have become a real plague on the U.S. bank patrons, as banks quietly replaced true overdraft protection with “courtesy overdraft” or “bounce protection” services that patrons didn’t ask for–but that generate far more fee income. A single lapse can rack up multiple $35 fees, and many banks re-order transactions to maximize the chances transactions will bounce.
The Fed move is good, but isn’t enough, because:
- It doesn’t cover check or recurring-debit transactions
- It doesn’t cap the amount or number of fees that can be charged
- It doesn’t prevent banks from manipulating how they process transactions to increase fee income
Bills that would put such restrictions on banks have been introduced by Christopher Dodd in the Senate and Carolyn Maloney in the House of Representatives.
For more, read:
- Decline my debit card, please
- Never pay another bounced-check fee
- Don’t be duped by bounced-check “protection”
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