By Joyce Kryszak
Buffalo, NY – US Senator Charles Schumer was in Western New York Monday to announce legislation that would curb abusive bank overdraft fees.
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Schumer says most banks automatically put customers in what are called overdraft loan programs. According to Schumer, this is anything but a favor. He says they're basically unauthorized loans that allow people to complete a debit card transaction, even if there isn't enough money in the account to cover it. But there is of course a catch. The banks charge as much as $35 for each overdraft. And Schumer says it doesn't matter if you are $100 short in your account or five cents.
Schumer says the total cost to Americans last year was $17.5 billion. Schumer says the fees can rack up quickly because debit cards are so often used in place of cash. Mike Fullington says he got slammed with several overdraft fees and didn't even know he was overdrawn.
Schumer says the law would provide several consumer protections. Most importantly, it would require banks to give people a choice to opt out of the overdraft program. If they want the protection, the law would require banks to warn customers when a transaction will trigger a fee so they can cancel the purchase if they choose. Banks also would not be allowed to manipulate the order of transactions to trigger more fees.
Schumer says it's one more step to protect consumers from the abuses of greedy financial institutions.
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