According to an article in the Star-Telegram, Senator Christopher Dodd, introduced legislation that would require banks to inform their customers when they overdraw their accounts via e-mail, text message, or postal mail and warn them if an ATM or teller transaction will put them into the red. In addition, the legislation would limit the number of overdraft fees to one a month, six times a year. But many banks are trying to jump ahead of the legislation, making changes to their overdraft protection policies while doing just enough to argue that new legislation is unnecessary while not cutting into the massive profits they make on overdraft fees.
The article said:
“Bank of America, Wachovia and JPMorgan Chase & Co. said they will limit the number of fees they charge and make it easier for customers to refuse overdraft protection… JPMorgan Chase will provide overdraft protection for debit cards only for customers who opt in. And rather than debiting withdrawals and purchases in order of size, from largest to smallest, they will be debited in the order in which they were made. Overdraft fees Wachovia, owned by Wells Fargo, will eliminate overdraft fees for customers when they overdraw accounts by $5 or less, and will charge no more than four overdraft fees a day. The bank did not say when the changes take effect.”
As the new Credit Card Act becomes law, many banks are looking for ways to offset the losses they will incur due to the new restrictions on credit card companies. Your bank account has become open season for bankers looking for “creative profits.” Overdraft fees have traditionally provided a wellspring of profits for banks. This year alone, overdraft fees are expected to deliver more than $38 billion in revenue for U.S. banks, that’s up from $19.9 billion in 2000. Today’s advice: Keep a close eye on your bank account, you may see new fees and service charges because of the banking industries efforts to offset losses from their credit card business.