Stay Curious. Stay Connected.
MailNewsletters♡Donate Now
Sign up
*Password must be at least 8 characters and contain one uppercase letter, one lowercase letter, one number and one symbol.
Already have an account?
By submitting, you consent that you are at least 18 years of age and to receive information about MPR's or APMG entities' programs and offerings. The personally identifying information you provide will not be sold, shared, or used for purposes other than to communicate with you about MPR, APMG entities, and its sponsors. You may opt-out at any time clicking the unsubscribe link at the bottom of any email communication. View our Privacy Policy.
Sign in to your profile
Forgot Password?
New to MPR News?
Welcome back
to news
for you
Reset Password

Enter the username on file and we'll send you a code to reset your password.

Still require assistance or not sure what your User Name is?
Welcome back
to news
for you
Email Verification

A verification code has been emailed to

Still awaiting the code?
MinnEcon Blog
Paul Tosto

What will consumers do with new overdraft options?

Go Deeper.

Create an account or log in to save stories.

Like this?

Thanks for liking this story! We have added it to a list of your favorite stories.

The Federal Reserve's move to make it harder for banks to to charge ATM, debit card overdraft fees has been widely applauded by consumer groups. Even the American Bankers Association didn't really balk.

But the Fed decision's got me wondering how it will really play out.

So instead of being automatically enrolled, you get information and if you don't opt in to the service you can't be charged overdraft fees on ATM and one-time debit card transactions.

Sounds good. The downside, of course, is that the bank will simply deny the transaction, potentially leaving you without cash when you need it.

Marshall MacKay, chief executive of the Independent Community Bankers of Minnesota, also notes that processing costs tied to the overdrafts will still need to be covered.

So in effect the new ruling implies that any expense incurred by processing those exception items should be paid not by the person who incurs the expense (overdraft), but by all the customers including the vast majority who do not use the service.

There is not a business around that does not ultimately pass it's expenses on to its customers. so it seems very unfair to the majority of bank customers to pay for the poor record keeping of a few.

Overdrafts are a multi-billion dollar money maker for banks. The FDIC in a report last year found automated overdraft usage fees assessed by banks ranged from $10 to $38.

Consumers Union and other groups say there are cheaper options for bank customers, including linked accounts, where money can be moved from savings to checking to cover an overdraft.

But, practically, what will consumers do? Will they seek out the cheaper alternatives? Will they keep the costly overdraft protection on ATM and debit-card transactions? Or will they just roll the dice?

Contact me directly and let me know what you'd do. What's your experience with overdraft services? What better options are there (besides not overdrawing your account)? What does your bank charge?

*******************************************

Click on the map icons below to read what sources in MPR's Public Insight Network have been telling us about their spending and saving in this economy. Share your story.