Starting August 15, 2010 banks will have to decline customers’ withdrawal requests at ATM’s and point-of-sale unless they give express permission to banks to let them overdraw their accounts for a fee. This change is a result of a change in the Federal Reserve’s Regulation E policy.
In Durango, CO this fee is running between $27 and $40
Bank of the San Juans – $27.00 fee
Bank of Colorado - $28.00 fee
First National Bank of Durango – $35.00 fee
Wells Fargo Bank – $35.00 fee
Alpine Bank – $40.00 fee
I understand that motivation of the banks; they want to make a profit. They market this service as a privilege. And it’s relatively risk-free for the banks. Most overdrafts are small, on average about $17, and most customers make good on their bad checks while banks earn fees.
This new regulation is all about banks being able to allow your debit card and ATM transactions to overdraw your account; then they cover the transaction and charge you a fee for the “privilege”.
I recommend that you don’t opt-in for your bank’s overdraft “privilege” and instead you take control of your personal finances and stop paying unnecessary bank fees.
3 steps for avoiding overdraft fees are:
- Create a budget and follow it.
- Use cash for all discretionary purchases.
- Balance your checkbook each month.