Whether you are interested in applying for a no-fee overdraft account or currently using a bank that charges overdraft fees, it’s essential to know the facts about these fees. You can take steps to stop them, even if they could be perplexing or irritating.
Banks plan to cut overdrafts
Several banks have announced plans to cut overdraft fees; savings could be around $4 billion yearly. These changes come after the banking industry was under increased scrutiny from regulators and lawmakers. It’s a good move, but it’s difficult for every bank.
Moreover, no fee overdraft with Current, and you receive a qualified deposit after setting up direct deposit.
Neobanks, or online banks, which provide the same goods and services as conventional banks, pose an increasing threat to many banks. The competition makes it more difficult for banks to justify charging high fees, and the federal regulators scrutinize banks more closely.
The Consumer Financial Protection Bureau (CFPB) is weighing in on banks’ overdraft policies and is expected to provide new guidance on the issue. Banks are also under increasing scrutiny from Congress, which is trying to pass legislation forcing banks to change their overdraft practices.
Despite all the hype, the new FTC rule on opting in for no-fee overdrafts has yet to be panned by the consumer community. The rule states that new accounts must be opted into before overdraft fees are tacked onto the bill. It is a good thing for consumers. Previously, consumers were forced to pay for overdrafts on a whim. In addition, this rule will help to improve consumer trust in the banking sector.
The rule also states that financial institutions must provide the same account features to all customers, including those with no opt-in. Some of the components may be in the form of fees or other hidden charges. It can lead to confusion and may require a consumer-centric communication plan. Alternatively, an institution may decide not to opt-in at all. If opt-in is the only means of ensuring overdraft protection, an institution may consider a consumer-centric communication plan. A consumer-centric communication plan may be the best way to ensure a consumer’s best interest.
Recurring overdraft fees
Fortunately, there are some simple steps to avoid overdraft fees. These involve minimizing your risk and ensuring access to adequate funds. If you find yourself in the sand trap, there are ways to get out of it.
According to the Consumer Financial Protection Bureau (CFPB), These fees can severely drain family budgets.
If you have not paid attention, overdraft fees can add up quickly. These fees are most common for consumers who use debit cards. If you can set up a debit card that charges you only for transactions, you can minimize the risk of being arrested.
Another simple way to avoid overdrafts is to use select checking accounts. These accounts typically feature a grace period, where you can avoid being charged overdraft fees if you can cover your balance within a few days.