Revised Bank Overdraft Fees Rules Lead to New Charges

Washington, D.C.Losses in revenue from bank overdraft fees resulting from a new federal rule have led many banks to create new charges in order to keep their bottom lines intact.

According to the Philadelphia Inquirer, banks have collected $1.7 billion dollars less from overdraft fees in 2010 than in 2009, representing a five percent decline.

The new federal rule, instituted this past August, requires banks to have customers approve automatic overdraft protection before applying overdraft fees on small purchases made with a debit card.

The Inquirer reports that some banks like Bank of America have eliminated overdraft fees on these kinds of charges entirely as a result of the rule, ultimately cutting overdraft revenue stream by more than half.

New policies have been enacted to compensate for the reduction in earnings. Many economic prognosticators said they suspect that free checking accounts may soon be phased out to help recoup some of the losses.

Some banks are getting more creative: Bank of America has created a new kind of checking account that allows for free online banking but charges consumers $8.95 per month if they want to use a traditional teller.

A recent survey conducted by the American Bankers Association revealed that 77 percent of bank customers paid no overdraft fees in the previous year and that a majority of those who did only paid overdraft fees once or twice.