American Banker: Overdraft Services Need Greater Oversight

American Banker: Overdraft Services Need Greater Oversight

A checking account is a vital product that allows consumers to manage their money, deposit their earnings, and pay their bills. Not so for overdraft service.

Overdrafts used to be a courtesy that banks would provide to customers on rare occasions. Not anymore. Today, the high price average consumers pay for this service—$225 over the course of a year when they overdraw an account—pushes many of them out of the banking system altogether.


Unfortunately, the Fed's model opt-in form is not an example of clear disclosure. It doesn't lay out the options for overdraft or make clear that consumers who don't opt in will avoid high overdraft fees. A May 2012 survey by The Pew Charitable Trusts of consumers who had overdrawn their accounts over the past year using their debit card bears this out—finding that 54% of consumers didn't realize they had opted in.

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