New rules kicked in last week for sky-high overdraft fees changed by banks. That’s a good thing.
The bad thing is that the rules apply exclusively to ATM withdrawals and one-time-only debit card purchases, as opposed to recurring payments such as monthly deductions for a newspaper subscription or utility bill.
Banks also remain free to enroll customers without permission in overdraft programs covering other transactions, such as payments with checks.
And some are working hard to persuade customers to sign up again for full “protection,” which can include fees as high as $39 for customers who didn’t know that, say, a $2 cup of coffee surpassed available funds.
“Customers should just say no to these astronomical fees,” said Jean Ann Fox, director of financial services for the Consumer Federation of America.
Overdraft fees are one of the banking industry’s most profitable and consumer-unfriendly business practices. Banks currently generate about $38 billion annually from service charges on deposits.