A senator is making an attempt at helping consumers with debt problems associated with check overdraft fees.
Connecticut Democratic Senator Chris Dodd is working on a bill that would require banks to get their customers to join overdraft protection programs. Overdraft protection fees are charged to consumers for making transactions when they have insufficient personal finances to do so.
“Excessive, automatic overdraft fees are forcing many American families deeper into debt at a time when they are already struggling to make ends meet,” Dodd said.
Fees for the transactions can be up to $30, even if purchases put accounts over by only a few cents. Some banks may reorder transactions so that larger ones take place first, which increases the likelihood the consumers will overdraw their accounts.
According to news reports, banks could make up to $38.5 billion in overdraft fees this year. A recent survey from the Center for Responsible Lending shows that consumers would prefer the kinds of measures put forward by Dodd’s bill. Of respondents, 80 percent said they want banks to ask their permission before putting them into an overdraft protection program.