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:
Credit-card mail offers are up. Mintel Comperemedia, which tracks direct marketing, says issuers sent 180 million offers to U.S. consumers in October 2009, the highest monthly total since December 2008. Before saying yes, check the terms and the APR, see if there's an annual fee, and visit a credit-card comparison site such as CardRatings.com.