American Banker: Overdraft Services Need Greater Oversight
A checking account is a vital product that allows consumers to manage their money, deposit their earnings, and pay their bills. Not so for overdraft service.
Overdrafts used to be a courtesy that banks would provide to customers on rare occasions. Not anymore. Today, the high price average consumers pay for this service—$225 over the course of a year when they overdraw an account—pushes many of them out of the banking system altogether.
Unfortunately, the Fed's model opt-in form is not an example of clear disclosure. It doesn't lay out the options for overdraft or make clear that consumers who don't opt in will avoid high overdraft fees. A May 2012 survey by The Pew Charitable Trusts of consumers who had overdrawn their accounts over the past year using their debit card bears this out—finding that 54% of consumers didn't realize they had opted in.
Read the full article at americanbanker.com.
- Safe Checking in the Electronic Age