This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Banks Push Overdraft Fees as Deadline Looms

BOSTON ( TheStreet) -- If you haven't opted for overdraft protection with your bank, prepare to have the service discontinued by Monday morning.

Aug. 15 is the deadline under the Federal Reserve's "Regulation E" to inform Bank of America (BAC - Get Report), JPMorgan (JPM - Get Report) or whichever bank you use to allow ATM and debit transactions that exceed the account balance to be covered for a fee. Because the deadline falls on a Sunday, anyone needing assistance from a human needs to act by the close of business today.

Most overdrafts from paper checks and automatic payments will continue to be covered for a fee, but ATM and debit transactions will be automatically denied.

This is the second phase of the clampdown on overdraft fees. On July 1, banks were prohibited from adding overdraft protection as an automatic feature on new accounts.

In the days leading up to Sunday, nearly anyone with a bank account has likely received mailings, emails, phone calls, ATM screen prompts and an in-branch hard-sell to keep them in these programs, a lucrative source of revenue for banks of all sizes. Don't expect the cajoling to stop any time soon, as banks keep up a full-court press post deadline to reclaim those who opted out, either by choice or inaction.


A concern expressed by the nonprofit Center for Responsible Lending (CRL) is that banks and credit unions are "scrambling to pressure consumers to opt-in to overdraft coverage."

A report the group issued last week finds fault with how some numerous consultants and marketing firms have been promoting their services. Its references a consultant whose pitch suggests offering a gift or cash offer to customers with four or more overdrafts annually if they opt in. Others have advocated ways for "snatching bank revenues from the jaws of Regulation E," suggesting that "if they are in the top 29% of abusers, call them."

CRL says that those with frequently overdrawn accounts are among the most financially vulnerable. They tend to be lower-income, single, non-white and rent their homes. "Charging large fees for typically small debit-card transactions erodes these consumers' finances further," it reads, adding that the average overdraft purchase is only $17.

"They just don't lay all the facts out straight," says Rebecca Borne, senior policy counsel for CRL. "Some of the solicitations we have seen suggest that a customer will be charged a fee if their debit-card transaction is denied. In reality, we know of no institution that does this, and the Federal Reserve has been clear that to do so would raise fairness concerns. Another example is when overdraft protection is advertised as a 'fee service.' It is free, of course, if you never use it. But if you do use it, it is the highest cost credit they offer."
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.06 -0.46%
JPM $61.37 -0.32%
WFC $48.92 -0.04%
AAPL $93.01 -0.65%
FB $118.34 0.24%


Chart of I:DJI
DOW 17,690.85 +39.59 0.22%
S&P 500 2,056.23 +5.11 0.25%
NASDAQ 4,736.6330 +10.9940 0.23%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs