Starting in August 2010, new regulation drawn up by the Federal Reserve prohibited overdraft fees on consumers using debit or ATM cards – unless the card user opted to join a bank’s overdraft protection plan.
That protection is still solidly in place, but you may not realize it. And Bank of America may not want you to know about it.
Bank of America on Thursday launched something called the “SafeBalance” account, which costs $4.95 a month and comes with no paper checks. Its primary selling point: you won’t overdraw your account.
That may sound good for those whose balances are usually low, and its certainly cheaper than paying a $35 fee every time you’re overdrawn.
But the monthly fee is not necessary.
The financial industry didn’t like the Federal Reserve’s new regulation back in 2010 because it meant that banks could no longer automatically charge customers huge fees for overdrawing an account balance on everyday purchases.
Under the new rule, customers must opt in for what is called “overdraft protection,” but that service can charge you $35 every time you try to pay for, for example, a $2 cup of coffee with an overdrawn account.
However, the best course of action for bank customers is to NOT opt in. That way your debit card will be simply declined if you don’t have enough money in your account to make a purchase. And you CANNOT get hit with $30-plus overdraft fees.
It’s easy to see how all of this can be confusing for Bank of America customers. But it shouldn’t be.
Bank of America is just trying to wrangle as many fees as possible out of its regular customers. It certainly isn’t the first big bank to try this in the four years since debit and credit card reform restricted certain penalty fees for card issuers.
Here is BofA’s marketing angle:
“The SafeBalance account was designed for a small segment of customers who want added protection against all overdrafts,” Betty Riess, a spokesperson from Bank of America, said in an email. “The key difference between SafeBalance Banking and our more traditional checking accounts is that there are no checks and no overdrafts.”
Here is the Federal Reserve page that explains your rights when it comes to overdraft protection.