The Fed says that banks need to get customer consent before imposing overdraft fees

November 12, 2009 – 1:25 pm – No Comment

Money from an ATM

After all the uproar that banks have started regarding overdraft fees for ATM and debit card transactions, the Federal Reserve has put a new rule in place that requires banks to get their customers’ consent before they are able to charge fees due to an overdraft. The rule is to go into effect on July 1st.

The rule came after consumer groups kept getting complaints from customers and members of Congress even said that the overdraft fees were unfair.

Many people believe that if their debit card is cleared for the charges, then there isn’t a problem with the amount of money in the bank.

I have always found it odd that overdraft fees always come from the smallest of charges and it is often something like a cup of coffee. I can only remember getting an overdraft fee once and it was for a soda from a convenience store. The only problem I had was the bank, which I had just visited and checked my balance, said I had more than $25 in my account.

It turns out some banks participate in a strange accounting practice that allows for small transactions to go through while deposits get put off.

I am really happy that the Fed got involved and decided to put this rule into effect. I wish it would have been put into place a bit earlier than July 1st of next year, but I suppose better late than never. Now if only some people were able to recover some of the overdraft fees that have been collected over the years for the “funny” accounting rules I was talking about earlier.