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Fed rules could help avoid debt from overdraft servicesNow, with new rules presented by the Federal Reserve, people with bank accounts have additional protections when it comes to certain practices that could hit them with high fees, which could put them further into debt. The Fed announced that on July 1, 2010, regulations would take effect that would require banks to get a customer's permission before enrolling them in an overdraft protection program. Overdraft protection programs have drawn flak from both consumers and those on Capitol Hill, especially since many banks enrolled customers in the service without asking them first. Overdraft protection services, at least from the banks' perspective, provide consumers with an added convenience. If the customer happens to make a transaction that overdraws their account, the bank will still let it go through. Not only can this keep the consumer from facing the embarrassment of a denied transaction, it can also make sure important bills are still paid. However, the service comes with a fee which may be as much as $35. The fee is charged no matter what the size of the transaction is that puts consumers over the limit. So, for example, that $3 cup of coffee that puts someone over the limit could end up costing them much more. Now, with the Fed's rules, banks will have to get customers to opt into overdraft protection services. Furthermore, banks are prohibited from punishing those who do not choose to take part in overdraft protection. "Our rule will help consumers better understand the terms and conditions of overdraft services and will give them an opportunity to avoid fees when these services do not meet their needs," Fed Governor Elizabeth A. Duke said.
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