Fed overdraft rules now in play

By Edith Barlow on Jul 3rd, 2010

New rules from the Federal Reserve Board recently took effect, meaning some people may be afforded additional protection against unwanted fees.

Through the rules, which started on July 1, banks must ask customer permission before enrolling people into an overdraft protection program. The regulations came in response to complaints from consumers and advocates alike.

In the past, banks would allow transactions to go through even if a person did not have enough money in their account. For the supposed convenience of this service, consumers were charged a fee for each transaction that occurred while they were without sufficient funds.

The fees could be as high as $35, and were tacked on for even smaller transactions, meaning that a $5 cup of coffee could end up costing a person $40.

With consumers already having difficulties trying to pay off debt, the fees were seen as excessive, especially since some people didn't even know they were enrolled in these programs.

If people decide not to seek overdraft protection, some transactions may end up being denied, meaning account holders should still keep track of how much money is in their account.

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