Aside from the “Credit Crunch” and the “Great Recession,” credit and debit card issuers are facing a “Perfect Storm” of an accelerated implementation of the “CARD Act,” the creation of the “Consumer Financial Protection Agency” and swiftly moving legislation to attack overdraft fee policies. Over the past week, four major banks announced plans to adjust overdraft practices early next year, the chairman of the House Financial Services Committee proposed a less powerful version of the “CFPA” to get it passed and several legislators are now calling for the final batch of new credit card rules be moved to December 1st of this year instead of February 2010. The American Bankers Association says credit card banks are working diligently to implement the new “CARD Act” provisions by next February, but it would be extremely difficult, if not impossible, for them to meet the new deadline.
On top of all this the FDIC is now calling for tighter restrictions on overdraft fees amidst the building momentum for federal lawmakers to address the issue that is directly linked to growing debit card usage.
BB&T announced it will eliminate overdraft fees for debit card and ATM transactions when clients overdraw their accounts by less than $5, and will charge no more than four overdraft fees per day. BB&T also will begin to alert clients at BB&T ATMs when they are making a withdrawal that would overdraw their account. Last week, Wells Fargo announced it will eliminate overdraft fees for customers when they overdraw their accounts by $5 or less and will charge no more than four overdraft fees per day. Chase announced it will eliminate overdrafts for debit cards unless the customer opts in to overdraft services; modifying the posting order to recognize debit-card transactions and ATM withdrawals as they occur; eliminating overdraft fees if a customerâs account is $5 or less overdrawn and reducing the maximum number of overdraft fees per day to three from six. U.S. Bank will eliminate overdraft fees when a customer’s account is overdrawn by less than $10, regardless of the number of overdraft transactions that may have occurred; limit the number of overdraft fees to no more than three per day; and offer the “opt out” ability to any customer who would prefer that we decline or return any transaction on their account, whenever possible, when they are presented against insufficient funds.
Despite the changes, the Center for Responsible Lending says Americans are fed up with bank overdraft practices. Media scrutiny and proposed legislation in Congress prompted three of the nation’s largest banks to unveil changes to their overdraft policies this week. But the changes are far from enough and, in fact, underscore the need for comprehensive overdraft reform as quickly as possible.