Bank of America Announces New Overdraft Policy

Apparently in response to new overdraft fee legislation that went into effect this year, Bank of America has announced changes to its overdraft protection policy. The new changes are ostensibly aimed at protecting its customers from fees. However, customers can still wind up paying overdraft charges/NSF fees. Read on!
Here is an overview of some of the announced changes. As a B of A customer, the overdraft fees you could pay - and whether charges made when your account lacks sufficient funds - will vary depending upon which setting you choose, the Standard Setting or the Decline-All Setting.

By default, customer will have the Standard Setting. With this setting:

• For ATM withdrawals and everyday (non-recurring) debit card charges, the bank will reject any charges made against an account with an insufficient balance. The bank customer will NOT be charged a fee in the process.
  
• However, for checks, recurring (e.g., monthly) debit card charges, and online banking payments made against an account that lacks sufficient funds, the bank will still pay the charges on the customer's behalf (even if the account balance is too low). This will result in their standard overdraft fee of $35, however.
  

However, customers can instead opt in to the Decline-All Setting. With this setting:

• All transactions (including recurring debit, non-recurring debit, check, and ATM withdrawal) will be declined if the account has insufficient funds in the account to cover the charge. A $35 fee will be charged for each and every declined transaction (except for everyday debit card charges).
  

For either situation, you can also choose to link an overdraft protection account such as a savings account, a second checking account, or a credit card. This will help you potentially minimize fees and allow more transactions to be processed since the primary checking account will have more "backup" funds. In this case, a $10 fee will still be charged for making the transfer in the case of non-sufficient funds in the primary checking account to cover a charge (but it is still less than the standard $35 NSF charge).

You can find out more details directly from B of A at: Bank of America Overdraft Under Control Announcement.

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If you truly want no-overdraft-fee checking, find a list of no-overdraft-fee banks at: No Overdraft Fee Banks List.

Landmark Legal Ruling Against Wells Fargo for Transaction Manipulation

In a landmark ruling, a California judge has ordered Wells Fargo (WFC) to pay more than $200 million in restitution to California customers as a penalty for manipulating bank fees.

The judge is quoted as saying that "The revenue generated from these fees has been massive."

Meanwhile, Paul Miller, an analyst for FBR Capital Markets, corroborated the judges ruling by stating that Wells Fargo's handling of the overdraft fees was "always a questionable practice" that has been "going on for years."

The $200 million fine to Wells Fargo is only a fraction of the $1.8 billion in overdraft fees the bank collected in CA during the three-year period from 2005 to 2007. And, it does not affect monies charged in other states.

The best alternative to paying overdraft fees remains to switch to a bank that does not charge overdraft fees.

New Fed Rule Set To Take Effect on July 1, 2010

The Federal Reserve System (the Fed) has a new rule on overdraft fees set to take effect on July 1, 2010.

The rule is officially known as Regulation E: Electronic Fund Transfers. Announced on November 12, 2009, the rule is designed to protect consumers from banks who have implement what many believe are predatory overdraft fee policies.

Essentially, the new rule prevents banks from automatically enrolling new checking account customers into their overdraft protection programs.

Background: in the past, most major banks have had opt-out overdraft protection programs, meaning that customers had to proactively say they did not want to be enrolled. The result was that they were being automatically signed up for these programs.

Overdraft protection sounds at first glance like something that protect consumers from having their charges and checks rejected due to a too-low checking account balance. However, many consumers feel that the programs are actually cleverly-disguised ways for the banks to make more money. And they could be right: overdraft protection programs have resulted in banks making over $30 billion per year in overdraft fees alone.

The banks make their money by charging overdraft fees of up to $35 per occurrence, with no limit on the number of charges per day.

One of the main points of consumer confusion with overdraft protection programs has been the fact that the banks will not reject debit charges made against a checking account with a too-low balance to cover the charge. This can make an unsuspecting consumer liable for $100 or more in overdraft charges in a single day, since their charges are not rejected at the register.

While the new Fed rule is designed to raise consumer awareness about how overdraft protection programs work by making banks ask customers to opt-in to the programs, many watchdogs say the new rule is not enough and that the problem is likely to continue.

One alternative that many consumers are following is to switch to banks that do not charge overdraft fees.

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Get a list of no-overdraft-fee banks in your area at: Escape Overdraft Fees.

New Bank of America Policy on Overdraft Fees

Bank of America has taken a step in the right direction concerning its overdraft fee policy. Starting this summer, B of A will start rejecting debit card purchases for charges that exceed a customer's balance.

This step goes even further than the new Federal Reserve guidelines announced in November of 2009, which require banks to make overdraft protection programs "opt in" rather than "opt out." (The new Federal Reserve Board guidelines go into effect on July 1, 2010).

Bank of America also took an important step to restore customer trust and confidence in the fall of 2009 when they set a minimum of $10 overdrawn for overdraft fees to start kicking in (previously, the threshold was set at $0). This new rule allows customers who only overdraw their account by a few dollars to avoid paying overdraft fees.

Of course, B of A will still charge overdraft fees to customers who bounce a check or otherwise make charges in excess of the current checking account balance.

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For a list of banks that never charge overdraft fees, even when an account is overdrawn due to a zero or negative balance, check out: http://www.Escape-Overdraft-Fees.com.

New Credit Card Rules Take Effect

Today, February 22, 2010, the new CARD act rules go into effect. The aim of the legislation is to have a positive effect on credit card holders. These changes will likely cost most credit card-issuing institutions money, so they will be looking to make up for the lost income in new ways. According to a recent CNN article those changes will likely include:

1. New fees on items such as balance transfers and international purchases.
2. Harder to qualify for a new credit card.
3. Reduction in rewards programs.
4. Potentially higher interest rates, since banks have moved customers over to variable rate cards: when the prime rate goes up, so will the interest on these cards.

Credit card holders need to be aware that, while the CARD act should benefit them in most ways, there are always loopholes that banks and financial institutions can exploit in an effort to maintain their profit margins in the credit card business.
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Paying too much in overdraft fees? Get a list of no-overdraft-fee banks in your area at: http://www.escape-overdraft-fees.com.

Bank of America and Chase Announce Limited Changes to Overdraft Policies

In response to increasing consumer ire and legislative attention from Congress, Bank of America and Chase have recently announced some upcoming changes to their overdraft policies. Here are some of the highlights for each:

Bank of America

1. B of A will no longer charge an overdraft fee when a customer's account is overdrawn by less than $10 in one day. (However, the balance must be restored to the account within 5 days to avoid the $35 fee).
   
2. They plan to limit to four (4) the number of times that an account can be charged an overdraft fee in one day. (note: still, that's a maximum of $140/day in overdraft fees if you're not careful!).
3. Customers will be allowed to opt out of overdraft protection programs. In that case, pending charges will be denied at the register.
   

Chase:

1. Starting sometime before March 31, 2010, banks will make all overdraft protection programs opt-in (rather than opt-out), which means consumers will be made more aware of the financial implications of the program and whether it is right for them.
2. Chase will also stop practicing "transaction stacking," whereby they process charges in the order of largest to smallest, thereby increasing the chances for paying overdraft fees. Moving forward, they will process transactions in the order that they are made.
   
3. The bank will not charge an overdraft fee if an account is overdrawn by $5 or less.

All of these changes may be too little, too late, however. For most types of transactions that currently result in overdraft fees, they will be unaffected by the new rules, meaning customers will still be out billions of dollars collectively in overdraft fees.

Of course, the very best way to avoid this entire mess is to find a bank that does not charge overdraft fees - even when you overdraw your account. You can find a list of banks that do not charge overdraft fees at: http://www.escape-overdraft-fees.com/.

For more on how to avoid overdraft fees,: http://www.squidoo.com/banks-without-overdraft-fees/.

Tips on How to Avoid Abusive Overdraft Charges by Banks

A bank overdraft is simply what happens when you charge too much on your debit or checking account-linked credit card - or when you write too large of a check - such that the payable amount exceeds the available balance in your account. While some people may overdraft by hundreds of dollars, most overdrafts that occur on a daily basis all across the country are for $5-$50. In other words, most people don't miss by much.

Now, in the old days (over 10 years ago), if a bank detected a potential overdraft, they would simply deny the incoming charge. If a check was written, the bank would reject the check, sending it back to the issuing bank. At the same time, the bank my charge a fee for doing so.



Fast forward to today. Most banks have implemented something called overdraft protection. This is an opt-out service which one enrolls in with most new checking accounts. Of course, by opt-out, it means that you are actually automatically enrolled in the service unless you choose to opt out. Most people, of course, just remain enrolled. After all: what could be wrong with an overdraft protection program? It has the word "protection" in it, doesn't it?

Here's what is wrong with it: the only thing that is really protected is banks' profits. With overdraft protection, when you overdraw your account, your bank will cover the difference for the few days it takes for you to pay them back. But, they charge you $30 or $35 for this service, which if equated to an interest charge would run into 1,000% or more for most overdraft situations.

Here are some tips for how to avoid abusive overdraft charges by banks:

1. Strive to keep a bit of padding in your account at all time. The more, the better, but $50 or so should do the trick.

2. Set up a savings account with the same bank and link it to your checking account. This will allow you to cover your checking account overdraft with the money in your savings account.

3. Consider switching to another bank that does not charge overdraft fees. There are some banks that will never charge you an overdraft fee, even when you overdraw the account!

For more on this topic, also see: http://www.squidoo.com/how-to-avoid-abusive-overdraft-charges-by-banks.