We reported previously that the Fed announced new rules that would limit overdraft fees charged by bank and credit unions. But now Congress wants to throw its hat into the ring too.
Both Sen. Christopher Dodd (D-Conn) and Rep. Carolyn Maloney (D-N.Y.) introduced overdraft legislation last month, as well. Here is what Ismat Sahara Mangla found out about Congress' plan.
- The Fed mandates an opt-in program on overdraft protection for ATM and debit card transactions, but it says nothing about checks or recurring electronic payments. Congress could extend the opt-in requirement for all such transactions.
- Both Dodd's and Maloney's bills limit the number of overdraft fees banks can charge per month and per year. The Fed is Mum on this.
- The Fed doesn't address the issue of merchant holds that can trigger overdrafts. When a consumer uses a debit card to book a car rental, pay for gas or hold a hotel room, merchants often put a hold on the funds in the customers checking account--and that hold is typically for a lot more than the amount of the transaction. Such holds can trigger overdrafts because the consumer assumes that the funds in his or her checking account are available for other purchases.
- Any opt-in program should also disclose the annual percentage rate you'll pay for the overdraft protection.
Do you think Congress' plan is more in depth and better than the Fed's?
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