A heads-up for all debit card users: as of yesterday, you’ll no longer be automatically covered for overdrafts on ATM transactions and one-time debit card purchases unless you specifically opt-in for overdraft service. This means if you attempt any transaction (or transactions, as the case may be) that exceeds the amount you have in your account, you’ll get declined. The downside: you might find yourself red-faced at the checkout line. The upside: you won’t get hit with big overdraft fees.
Starting July 1, 2010, banks were ordered to start notifying customers opening new accounts of the institution’s overdraft services and fees, give them the choice of opting in, and present other options to them. On August 15, 2010, this went into effect for existing accounts.
According to tests conducted by the Federal Reserve Board, most consumers prefer not to be automatically enrolled for debit and ATM overdraft services; they’d rather have the choice to opt-in. And Credit.com found in a poll conducted this past May that 48% of consumers surveyed would consent to the service rather than get declined (while 47% would choose not to opt-in).
In other overdraft news, a California judge called out Wells Fargo last week for deceptive overdraft fee policies, and ordered the bank to pay a $203-million fine to affected customers. The bank processed customers’ transactions in order of highest to lowest dollar amount (instead of chronologically), which served to drive balances down quicker and increase the chances of incurring multiple overdraft fees on items that exceeded the balance.
Despite this decision, this practice is still legal for banks to engage in (even for Wells Fargo) – so readers, keep an eye out for it. Two bills aimed at putting a stop to such policies are in Congressional committee.
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**Thank you for posting this information!** I hope everyone knows about this.
I know Chase bank has sent me about 2 trees worth of notices telling me about this.
This is definitely a double sided coin:
—You can be embarrassed if you don’t have the funds (especially if you are out with others)
OR
— You can see it as a money saver, since before you would be allowed the transaction but they would slap you with a fine of $15-$35 depending on the bank.
Some will like it and some will not.
Either way, great info and thank you for posting this information for us…