Tuesday, October 6, 2009
Anger at bank overdraft fees gets hotter, bigger and louder
Posted by Leah Gorham
By Kathy Chu, USA TODAY
Controversial bank account fees, which have fattened banks' bottom lines at the expense of vulnerable consumers, are rapidly becoming a black eye for the industry.
Under siege are the fees charged to consumers who spend more than they have in their accounts, whether by check, debit card or at the ATM.
Last week, four of the nation's largest banks said they would scale back some of their overdraft policies. Their efforts, while meaningful, have failed to appease lawmakers, including powerful Senate Banking Committee Chair Chris Dodd, D-Conn., who is preparing legislation to crack down on what he calls a pattern of "abusive" practices.
At first glance, banks' practices seem reasonable enough: Overdraw your account, and the bank will cover the transaction — for a fee. The problem is, most banks don't ask consumers if they want their transactions automatically paid. In recent years, as banks realized how lucrative these fees can be, they've made it easier for consumers to overdraw their accounts, to the tune of $36.7 billion in revenue last year, USA TODAY research has found.
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