Americans who are having debt problems and issues dealing with their personal finances may be happy to hear that the Federal Reserve has taken action regarding overdrafts on bank accounts.
New rules from the Fed will require banks to get permission from consumers before enrolling them in an overdraft protection program. The new rules will take effect July 1, 2010.
“The final overdraft rules represent an important step forward in consumer protection,” said Fed Chairman Ben Bernanke said.
Though banks have presented such programs as an added convenience to consumers, many people feel as though they take advantage of consumers.
Through overdraft protection, banks allow purchases or ATM transactions to go through even if a person’s account does not have sufficient funds. Banks then charge a fee for allowing the transaction to pass.
Banks have been criticized for the practice, which can charge people fees as large as $35 regardless of the size of the transaction. Furthermore, banks have been accused of reordering transactions to make it more likely that overdrafts will occur.