Overdraft Changes and Your Bank Account

Friday, June 18, 2010

Brian Lehrer producer Jody Avirgan talks about some confusing mail he's been getting. Then, Gail Hillebrand, senior attorney for Consumers Union, discusses the coming changes to bank overdraft charges, what it means for debit cards, and other credit card legislation in the works. Then Nessa Feddis, retail banking expert at the American Bankers Association provides an industry perspective.

Have you been getting letters or calls about changes to your checking account? How have they been phrased, are they clear, have you acted on them? Let us know!


Jody Avirgan, Nessa Feddis and Gail Hillebrand

Comments [23]

Carol Kaplan from Washington, D.C.

Hi - I'm writing from the American Bankers Association. Thanks for having Nessa Feddis on the show today. First, here is more information on the new overdraft rules, direct from the "horse's mouth" (the Federal Reserve.)

Let me explain that the new rules don't take effect until July 1st for new accounts, and August 15 for existing accounts. So, no matter whether you opt-in, or not, the new rules won't take effect until then.

Also, the rules affect debit card purchases only. It doesn't matter if you use the card as "credit" or debit." If you choose not to opt-in, and don't have the funds in your account, the debit card purchase will be declined. This will be great for those people who don't want to pay overdraft fees for debit card purchases. However, some people like the protection of knowing that when they are in a short-term jam, like at the grocery store checkout, that their debit card will go through, even if they don't have the funds that day. The great news is that consumers have a CHOICE now. The ONLY way a bank can charge you overdraft fees, after the effective date, is IF you opt-in. If you don't opt-in, and the bank mistakenly lets a debit card purchase go through, they still can't charge you an overdraft fee. I'll try to answer any other questions you have.

Jun. 18 2010 11:24 AM
Ronda from Houston (NYC expat)

Zahara and Mordy, WAKE UP! Know how much money you have and don't spend more. This 'protection' is designed to lull you into a false sense that the bank is there to tke care of you. Have we learned nothing???
Right on to what Jack, Mike and Marieille have already said.

Jun. 18 2010 11:12 AM
Rob Tucher

I bank at Chase and have received multiple copies of the same mailing that Jody read on air. I did not find it clear at all. I used my debit card recently to buy small items at four different places against funds I was lead to believe were available. When I got home I had four $34 fees charged for a total of under $35. When I complained I was told I had opted in on the bounce protection. I insisted I had not and they waived three of the four charges. Then I deposited a long-overdue and large check from a client and told the teller I was pretty broke and needed the money. I was told I'd have 10% next day on Saturday, and the rest on Monday. I scheduled 11 checks to go out for Monday, including my mortgage, because I was assured I'd have the money. I also transferred money to my personal account. Even though funds showed up as available, they then took it back, charged fees for all 11 PLUS the transfer ($34 each) even though they paid, put my account negative $3700, and charged me excessive overdraft fees of $10 each because I didn't have the money to cover any of the overages or the fees.

Jun. 18 2010 10:57 AM
Yvonne from Park Slope

As I called but did not get through, I would like, here, to challenge the advice that, if we get that letter, we should do nothing.

My letter from Chase said that my debit card WOULD CHANGE UNLESS I DID SOMETHING. So, I called and made it clear that I did NOT want this new coverage.

Then, I got another letter confirming that they had given it to me anyway. So, I called again and I was angry and she was apologetic but I do not believe it was an accident.

Read carefully the exact wording of the letter as, with some wordings, doing nothing is consent.

Jun. 18 2010 10:46 AM
cANDICE DONNELLY from manhattan

My daughter was charged something like $500. in overdraft fees recently. She says she had specified she did not want overdraft protection. Does she have any recourse to get the fees refunded?

Jun. 18 2010 10:44 AM
Marielle from Brooklyn

I agree with Jack - wake up and pay attention to your money! Balance your checkbook and KNOW how much money you have in your account. Don't ever cede responsibility for your money to someone else. They will plunder you every time.

Jun. 18 2010 10:44 AM
Sophie from Poughkeepsie, NY

I have an ING account. Lots of conveniences, except when you have to deposit a check.

Jun. 18 2010 10:43 AM
Jack in Brooklyn

People should just learn how to balance their checkbooks instead of using the ATM to check their balance and should use a credit card instead of a debit or ATM card. This would eliminate a tremendous number of overdrafts. Why is it that people can't just balance a check book?

Jun. 18 2010 10:41 AM
Ellen from Brooklyn

I just got a letter from HSBC saying they were canceling "Interest Checking" and changing it to something like "Convenience Checking" that was supposed to make it sound better. New "convenient" account has minimums and all sorts of fees if you go below the minimum. I'm wondering if it's because of this?

Jun. 18 2010 10:41 AM
Mike from Nyc

BTW.. the biggest shareholder of BP oil is JP Morgan Chase.

Jun. 18 2010 10:41 AM
Mike from Nyc

I remember the days before debt cards, when a credit card purchase would not go through if you did not have the funds. This reversion back to the banks not being able to put the purchase through is not a few feature. It's going back to the way it was before.

Jun. 18 2010 10:39 AM
Jay from Norwalk

I received one of those obscene letters from my bank, Chase, stating that overdraft would cost me $34 a pop. I am dumping Chase and opening up an ING checking account, overdraft charges are interest only.

Jun. 18 2010 10:37 AM
Mordy from NY

Question: what happens if I use my card at 10 places and it takes a day till the pending charges go through and as it clears i hit overdraft? Do the banks THEN have a right to charge?

Jun. 18 2010 10:35 AM
Rebecca from New Haven

The fact that these new rules can even function proves that at least Bank of America has been blatantly lying to consumers about how overdraft fees are issued. When I've been charged these fees, and I've called BoA saying that my card balance said at the time that there was enough money to cover the transaction, the response I got was that the available balance doesn't necessarily reflect reality if charges haven't cleared. So if that's true, how are they going to know to turn down a charge on the basis of you not having enough money in your account?

Jun. 18 2010 10:35 AM
Tracy Lane from Brooklyn NY

I recently received a notice from my bank, Chase.
That they were automatically moving my leisure debit card rewards point to their new Ultimate Rewards program. They are charging a $20.00 annual fee.
I also received the overdraft letter protection.
When do the fees stop?
Thank you for explaining what they are doing very helpful.
Tracy Lane

Jun. 18 2010 10:34 AM
Telegram Sam from Staten Island

Andrew for Treasury secretary! You go, dude!

Jun. 18 2010 10:34 AM
Ronda from Houston, TX (NYC expat)

I received one of the letters from Chase. Once I read it, I was happy that for once, I wouldn't have to do something.
For those out there who think they need the overdraft protection, if you can't afford the cup of coffee without a loan, don't but it!!!

Jun. 18 2010 10:33 AM
Zahara from Hoboken

I signed up for it months ago. I think it's a good plan as long as long as you bring your account up to date before end of business day.

Jun. 18 2010 10:33 AM
Robert from NYC

What's the difference between banks and the mafia? Now they both use the word protection. Now they both charge huge interested rates. What's the difference? I personally don't care what the bankers have to say about it and how they defend doing this; fact is it's mafia psychology.
Eh, eh, psst, need protection? C'm'ere, eh!

Jun. 18 2010 10:32 AM
Ken from Little Neck

I got the exact same letter from Chase. I actually read it far enough to realize what they were actually offering, and promptly ripped it up. I would encourage everyone else to do the same!

Jun. 18 2010 10:32 AM

I've been seeing several of them dotting my bank log ins and have been confused enough to call the bank. They are not easily understand, especially the charges per overdraft (high), but the wording is such that say "YES" offers you protection. After a brief consult, I realized its another money making 'trick' banks are using off those who overdraw on their debit cards Personally I see it as akin to fees charged by check cashing services.

Select "NO" and look into "linked overdraft protection on your checking/debit" which moves dollars from a different account or credit card at a more reasonable rate IF you 'must' have funds available.

Jun. 18 2010 10:32 AM

I always say "credit" when I use my debit card. How will this effect me?

Jun. 18 2010 10:30 AM

Are all banks assuming the same postion as Chase?
I'm with TD. Whaddya know about them?

Jun. 18 2010 10:30 AM

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