Automatic overdraft fees are over for consumers opening new bank accounts.
You’ll have to opt-in to receiving overdraft protection, which allows you to overdraw on your account for a fee of as much as $38 when making debit card purchases. It’s a relief for those whose bank balances can come a bit too close to zero in between paychecks.
After several stories of consumers racking up hundreds of dollars in overdraft fees for purchases as small as a cup of coffee, even while deposits to accounts are still pending, according to the Treasury Department, new government regulations now require consumers to opt in to receive the “protection” on new accounts. The opt-in rule will apply to existing accounts on August 15th.
If a consumer doesn’t opt in, purchases that cost more than an account’s available balance will be declined.
As an alternative to opting in to hefty overdraft fees, you may be able to link a savings account to your checking account and set up overdraft-transfer protection, suggests Consumer Reports, so that in the event that you overdraw on your account, the extra money will come out of your savings account and you’ll be charged much less, about $5 to $10 for each transaction.
But while the new rule seems to be good for consumers, banks losing billions of dollars in overdraft revenue will likely find other ways to make money in the same way that new, consumer-friendly credit card rules have led to higher interest rates.