Debit Card Overdraft Fees Getting Federal Attention

The Federal Reserve has had it with fees on debit card ATM and retail transactions. Banks have been allowing consumers to withdrawal more than their account balance and/or make purchases that cause their account to overdraft. These banks then charge the consumer significant overdraft fees.

I’ve always been a big fan of debit cards, since I never carry cash. I like that the money comes directly from my account and isn’t loaned to me on credit. But, lately there’s been a bit of stretching of the debit card function. Some banks allow consumers to draw more than the balance of their card and let purchases overdraft all with the intention of collecting fees. If you ask them, they’ll say they are just being nice, but if you ask the Feds they’ll call it something quite different.

Fortunately, your credit union debit card has not been a part of this. Your credit union debit card is a true debit card. Your spending power is confined to the amount of money in your account. There aren’t any sneaky practices to drain you of your hard earned money.

But the practice isn’t going away. Now consumers will be notified that they must opt-in to allowing overdraft transaction (which would then cause a fee to be issued). So for those of you who like to add $32 fee to your $4 overdrafted specialty coffee purchase, just say “yes” to fees. For me I’ll stick with the credit union honest debit card.