Effective 7/01: customer consent needed for overdraft enrollment
Beginning July 1, banks will have to get permission from new customers before signing them up for overdraft coverage programs. Existing customers can do the same starting in mid August.
Banks stand to lose profits from customers declining to enroll in such money management programs. The Center for Responsible Lending says that banks typically charge a $34 fee each time an account goes into overdraft.
“Banks have been scrambling in advance of the July and August deadlines to persuade customers to say okay to opt-in to overdraft charges, but routinely fail to fully disclose the existence of lower-cost options, such as a line of credit,” the CRL said in a release.
Consumers still have options for overdraft protection even if they opt-out of a specific overdraft program. The CRL suggests that consumers sign up for a line of credit or link their checking and savings accounts together to prevent overdrafts from occurring.
Economic research firm Moebs says that over $37 billion was made in overdraft fees last year. The firm predicts that this year only $35.2 billion will be profited due to financial reform.