In the past, many consumers have been hit for tens or even hundreds of dollars in fees because they accidentally overdrew their checking account when making a purchase. Now, new rules from the Federal Reserve will soon make those charges a thing of the past.
Bowing to pressure from consumer advocates, the Fed recently introduced new rules that will force banks that issue debit cards to ask customers to opt into programs that will allow them to overdraw their account. According to the Baltimore Sun, banks say they allow customers to overdraw accounts to avoid embarrassment, but consumer protection agencies say it’s to drive profits.
Consumer advocate Jean Ann Fox told the Sun that this practice is the kind of thing customers don’t care about nearly as much as the lenders, who made $23 billion on overdraft fees alone in 2009, and that number could drop by 50 percent if consumers don’t sign up for debit and ATM overdraft programs before they have to be in place on August 15.
A report from TIME said that some banks are even trying to scare their customers into enrolling by saying that there would be no overdraft protection “even in an emergency.”