Good news about fees for debit-card overdrafts

Americans paid some $38 billion in overdraft fees last year, but new Federal rules could cut that sum. They make banks ask customers for permission before charging overdrafts on debit- and ATM-card transactions. In other words, customers will have to opt for overdraft protection.

The rules kick in for new cards July 1 and for existing accounts Aug. 15. They don't cover checks or recurring debit transactions, such as utility payments.

Even now, banks could prevent overdrafts by warning of low funds or declining a transaction. But most allow overdrafts as part of "courtesy" programs in which they automatically enroll consumers. Some courtesy. Banks charge an average of $35 per overdraft, according to the Consumer Federation of America. If you don't repay within a few days, you're hit with extra charges.

Bank of America starts charging fees when you're more than $10 overdrawn. Let's say you've made four transactions that put you over by more than $10. You'd be charged $35 for each overdraft. If you didn't repay them in five days, you'd be dinged another $35 for each. Total: $280 in less than a week.

Until the new rules begin:

• Link your checking account to a savings account and set up overdraft-transfer protection. With that method, the cost for overdrawing a checking account is generally more like $5 to $10 each time.
• Decline overdraft protection. Bank of America already lets customers opt out; Chase and Wells Fargo have announced that they will soon. Like B of A, they'll limit when and how many overdrafts they charge. (B of A's daily limit is four.)
• Budget better. Balance your checkbook and sign up for alerts from your bank or from a personal-finance site such as Mint.com to let you know when your account has fallen to a certain level.
• Make sure you're with the right bank. See the CFA's overdraft-fee studies of major banks at www.consumerfed.org/finance/fees.asp and check your local bank, which might have more consumer-friendly terms.