New Bank Overdraft Rule May Cut Fees for Consumers

Published on:
12 September 2006 at 10:19 a.m. ET

Written by: Unknown Author –

http://www.insidearm.com/news/00007215-new-bank-overdraft-rule-may-cut-fees-for-/

By Jonathan Stempel, Reuters

A new federal rule may help many bank customers better understand overdraft protection for their accounts, and perhaps avoid costly fees.

The Federal Reserve on Thursday approved new requirements under the Truth in Savings Act for what is often termed “bounced check” or “courtesy overdraft” protection. The changes require more disclosure of fees and extend prohibitions against misleading advertisements. They take effect July 1, 2006.

The changes would benefit consumers who might better avoid what are effectively astronomical interest rates, often hundreds of percent a year, when they overdraw.

Conversely, they could hurt banks that depend more heavily on deposit service fees, as the industry faces slowing loan growth and as mortgage banking lags its 2003 peak.

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New Bank Overdraft Rule May Cut Fees for Consumers

Unknown Author

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