Banks now need your permission to enroll you in overdraft protection

Starting today, banks have to get your permission to enroll you in an overdraft protection program. This is one of the many consumer-friendly provisions of the CARD Act passed earlier this year.

As many of you know already, an overdraft protection program links your checking account to your savings account, so when you overdraw your checking account, the money is automatically transferred from your savings account to cover the overdraft. Of course, banks charge a fee to do this, usually around $40, even if you only overdraw your account by a few dollars. This is one reason why some commentators have referred to overdraft protection as the “$40 cup of coffee.” Before the enactment of the CARD Act, banks didn’t have to get your permission to enroll you in this program. Now they do. So if you’re asked if you want to enroll in the overdraft protection program, consider whether you’re willing to pay  $40 for a cup of coffee before saying yes. Or better yet, keep your checkbook balanced.

Banks Must Now Ask You To Opt In To Debit Card Overdraft Plans | The Consumerist | July 2, 2010

(photo: 2Tales)