The Federal Reserve announced a new regulation Thursday, prohibiting banks from automatically charging consumers overdraft fees without their consent.
Beginning July 1, 2010, the rules will require that consumers receive a notice elucidating card policies and fees. If express permission is not given by the card holder, the card issuer cannot charge overdraft fees for purchases or ATM withdrawals. The rules are designed to avoid overdraft fees on minor buys like coffee, which can result in charges astronomically higher than the price of the purchase.
Banks have been known to charge up to $39 in overdraft fees even in stances where the cardholder overdraws by as little as few cents. Federal officials claim that the banking industry can bring in as much as $38 billion in overdraft fees alone each year a statistic intended to decrease radically under these new rules.
"The final overdraft rules represent an important step forward in consumer protection," said Federal Chairman Ben Bernanke "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."
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