Federal Reserve Bans Overdraft Fees Unless You Consent In Advance

I've committed an overdraft a few times and I was grateful when Bank of America honored my check and levied a fee (around $15 if I remember correctly).

In the future, I'll have to sign up for this option. Banks will no longer be able to automatically charge overdraft fees.

The Federal Reserve and the Obama administration with the consent of Congress is cutting way back on lots of bank profit centers. Credit cards are now under stiff new rules limited interest rates changes, etc.

The Los Angeles Times reports:

Flexing newfound muscle as consumer protector, the Federal Reserve on Thursday banned ATM and debit card overdraft fees unless customers have opted to pay to ensure that balance-busting transactions go through.

The new rules, which take effect July 1, mean that if you don't have overdraft protection, any debit card purchase or ATM cash withdrawal will be rejected if it exceeds the amount of money in your account.

And if you do want overdraft protection, your bank will have to give you a notice explaining the service and its fees before you can accept it.

Overdraft fees typically range from $10 to $38 for each transaction, according to a 2008 study by the Federal Deposit Insurance Corp.