Overdraft Fees on the Rise

NEW YORK (LowCards.com) -- Overdraft fees are again taking a larger bite out of our pocketbooks.

In July 2010, new regulations from the Federal Reserve required consumer consent for overdraft protection for ATM and debit card transactions. These overdraft regulations cost the banks billions of dollars in revenue, but the overdraft fees are increasing once again.

It's likely better to let a transaction fail than incur big bank overdraft fees -- $38 billion nationwide last year.

Overdraft revenue fell for six quarters, but were up $700 million in the second quarter of 2011, according to Moebs Services. In addition, the average number of overdrafts per household increased during the period, with Moebs finding that 26% of consumer checking account holders intentionally overdraw their checking account.

New research by the Pew Charitable Trust found that overdraft fees would cost Americans an estimated $38 billion last year.

Pew found that banks can still maximize the number of times an account goes negative by processing deposits and withdrawals in an order that reduces the account balance as quickly as possible. They suggested the posting should be neutral.

Overdraft protection is not a necessity, and opting out is an easy way for consumers to avoid an expensive fee.

If you don't have enough money in your account and you don't have overdraft protection, the transaction will be declined. That seems a much better alternative than these costly overdraft fees.

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