If you have ever gone over the limit on your bank account while, say, using your debit or ATM card, your bank may have automatically covered the transaction but charged you an overdraft fee.

But is it worth it to have the bank cover a purchase that might be much smaller than the $30 or more you will be charged for the overdraft? Keep in mind, if you’re using your card throughout the day, you can be hit with several overdraft fees.

Regulators are now looking at overdraft programs. And consumer groups and the American Bankers Association are at odds about what’s best for people.

Consumers pay at least $17.5 billion a year in overdraft fees, according to the Consumer Federation of America. The group wants consumers to be able to opt-out of banks automatically covering you with overdraft loans and then charging stiff fees.

According to the CFA:

 - The typical highest fee for an overdraft is $34.65, a 15 percent increase from three years ago.

 - Sixty percent of the biggest banks will tack on another fee if you don’t repay the overdraft loan and the fee within a certain time. Some charge $6 to $8 per day until you pay up.

- Less than a third of the largest banks set a limit on how many transactions in a single day can trigger an overdraft fee. For instance, Bank of America customers can find themselves triggering up to seven overdraft transactions in a day and paying a total of $245 in fees.

The American Bankers Association says 80 percent of consumers have not paid an overdraft fee in the past year. That shows most people manage their accounts well, the trade group says.

And of those that paid an overdraft fee, 85 percent said they were glad their bank covered the transaction while only 14 percent wished the bank didn’t, the ABA says.

Put another way, though, that means 20 percent of consumers did pay an overdraft fee. That’s a significant number.

Of course, consumers should be responsible and make sure they have enough money in the bank to cover their purchases. But fees are getting out of hand and consumers should have a say whether or not they want transactions automatically covered or not.

Your thoughts?

Posted by Eileen Ambrose at 11:40 AM | Permalink | Comments (0)
                    

Hate those overdraft fees and ATM fees? Hate calling your bank only to listen to an automated voice? Hate the hoops you have to jump through to resolve a banking problem?

Join the angry crowd.

The third annual J.D. Power survey on banking, which was released yesterday, found that overall satisfaction in retail banking decreased considerably since last year — down 26 index points on a 1,000-point scale to 737 in 2008.

Contributing to the banking industry's image problem in particular is the growing dissatisfaction with fees. Fees are the most commonly reported problem by customers, as well as the second-most common reason for switching financial institutions, the survey says. Customers are also less than happy with a rise in the number of problems experienced and problems that go unresolved, increases in wait times to see tellers or speak to phone representatives, and declines in the ease of accessing branches all contribute to the drop in satisfaction.

Continue reading "Consumer satisfaction in retail banking drops" »

Posted by Dan Thanh Dang at 6:45 AM | Permalink | Comments (3)