Banks Blitz Customers to Keep Overdraft Fees Coming
$20B in penalty fees threatened by Fed's new opt-in rule
By Rob Quinn,  Newser Staff
Posted Feb 23, 2010 8:21 AM CST
A Federal Reserve rule that will prohibit banks from charging overdraft fees on ATM and debit card transactions unless a customer allows it takes effect July 1.   (AP Photo/Lisa Poole, file)

(Newser) – Expect your mailbox to be stuffed in the coming weeks with entreaties from your bank, which desperately wants you to sign up for pricey overdraft fees it used to be able to slip into the small print. Under new Fed rules going into effect July 1, bank customers must opt-in for automatic debit card and ATM overdraft privileges, which rake in an estimated $20 billion in penalties every year, the New York Times reports. Hence the marketing blitz.

The banks plan to use every method of persuasion possible to get customers to opt-in. And many are taking steps to expand their short-term, high-interest "payday" loans to replace the potential loss of penalty fees. "They’re looking for ways of replacing their overdraft income,” a consumer protection lawyer tells Bloomberg. “Instead of pricing their products openly and up-front, they seem addicted to back-end ways of making profits."