How to Protect Yourself From Overdraft Fees
Senators Corey Booker and Sherrod Brown are re-introducing the 2018 bill to end overdraft fees at banks, Vox reported this week. The law to stop speculation on overdrafts prohibits banks from charging overdraft fees on debit transactions and charging insufficient fees for using funds at ATMs. Check-based overdraft fees will be limited to once a month, with no more than six overdraft fees per calendar year. Banks will not be able to reorder transactions to maximize the overdraft fees they can collect.
Here is Vox’s Li Zhou who received a preliminary overview of the renewed proposed law on the potential impact of such a bill:
If the overdraft fee were canceled as stated on the invoice, several things could have happened. More customers could see that transactions were completely declined, so they would not be able to complete their purchases, but they would also not face a sudden unexpected commission. Banks can also treat money borrowed by customers the same way they treat other loans — charging an interest rate from it.
Clients have had to choose overdraft protection and associated fees since 2010. A 2018 survey of overdraft practices at Booker’s office shows that of the 13 banks that responded to his request for information, only Bank of America does not charge overdraft fees. for debit purchases. But he still charges $ 35 for overdrafts a maximum of four times a day. It notes that Chase does not charge overdraft fees for ATM withdrawals; the bank charges 34 dollars for an overdraft, but not more than three per day. Both Regions and SunTrust charge $ 36 per overdraft for a maximum of six per account per day, while TD Bank can charge you $ 35 up to five times per day.
Oh, and don’t forget about extended overdraft fees. This is the amount that banks begin to charge when your account has been exceeded for a specified number of consecutive days. Some banks such as Regions and Wells Fargo do not charge extended overdraft fees. Others you may encounter: $ 36 one time after seven consecutive days of overruns at SunTrust and US Bank; $ 8 a day after seven straight days on BB&T.
If you are not familiar with these numbers and do not understand why your palms are suddenly sweating, be sure to know that banks can reorder transactions to force you to increase the number of overdraft cases, and these fees can be repeated even one day as they ‘re added to each a separate transaction.
Even people who have linked a savings account to their checking account to prevent such overdraft fees may still face a fee for avoiding overdraft fees.
In 2017, the CFPB reported that people who frequently exceeded their bank accounts with overdraft protection (10 or more times in 12 months) were paying $ 450 more in commission. At the time, the bureau presented four prototype overdraft disclosures, hoping banks would use them to make overdraft fees and overdraft protection programs more transparent. But after the departure of Director Richard Cordray, the CFPB has solved many problems .
Zhou notes that the bill “has little chance of being passed in a Republican-dominated Congress,” but it could pressure banks to change their practice. Plus, Booker is one of about 74 Democrats running for president, so even if the bill stalls again, it’s kind of an advertisement that reminds us that he’s a very nice guy who cares about ordinary people suffering from royalties.
In the meantime, find out the commissions of your bank. Remember to look at the fees for your specific account type , rather than just typing “Money Bank + Fees” on Google. Your account is probably called “Basic Fundamental Verification for Commoners” or something tricky like that. Learn how to opt out of your bank’s overdraft options if you have repeatedly violated the overdraft rules and would rather be rejected than pay. And check your bank balance! All the time! Maybe once a day ! So, just in case!
Updated on May 28, 2019 at 6:00 pm ET: This post previously stated that Bank of America was charging an extended overdraft fee. The bank stopped charging this fee in 2017, according to a company spokesman.
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