The Federal Reserve will prohibit banks from charging overdraft fees on automated teller machines or debit cards, unless a customer has agreed to pay extra charges for exceeding account balances. Financial companies will have to explain overdraft programs and fees, as well as choices available to consumers, the Fed said today in a statement announcing a rule that takes effect next year.
The rule comes after Fed research indicated that consumers don’t like to be automatically enrolled in overdraft protection programs. Of course, most consumers don’t even know they’ve been enrolled until they get hit with a fee after overdrawing their accounts. More at Bloomberg.
(Hat tip: Mort Goldman.)
Addendum: The new default rule won’t apply to old fashioned checks or regularly recurring debits from checking accounts. As more and more people pay their cable, phone, and utility bills automatically and electronically, a new round of debate about the default rule may still be ahead.