Debit Card Holders Confused By New Rules - Other News

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Debit Card Holders Confused By New Rules

Debit Card Holders Confused By New Rules

Add to Favorites:
Debit Card Holders Confused By New Rules

Last summer, the Federal Reserve implemented policies to protect consumers from unexpected charges. The new law required that a debit cardholder “opt in” to pay an overdraft fee if they swiped their debit card but did not have enough funds to cover the purchase in their account. The opt-in is in lieu of having the purchase declined. The premise of the new law passing was to protect consumers from paying big overdraft fees. It seems, however, that the opposite effect has occurred.

The Opt-In

Interestingly enough, when it came time to opt in to pay the fee or not to pay the fee, the majority of debit cardholders opted in. About 75% of debit cardholders chose to pay the fees over having their purchases declined. This opt-in has had the opposite effect that was expected. The overdraft fees prior to the law passing totaled $36.5 billion in 2010. While the final overdraft fees for 2011 are not in yet because it is only April, at the current pace, the fees are expected to reach $38.5 billion by the end of the year.

The Confusion

According to a report released by the Center for Responsible Living, a majority of debit cardholders are still confused. The report states that several banks “use scare tactics and other misleading practices to persuade consumers to opt into high-cost overdraft programs for debit card purchases,” which can find unsuspecting consumers paying as much as $35 for an overdraft.

For example, one bank marketing notice that went out to its customers states, “The Bounce Overdraft Program was designed to protect you from the cost and embarrassment of having your transactions denied.” Experts say that this is where some of the confusion began because if the customer does not opt into the program, then they would NOT pay a fee; their purchase transaction would simply be denied at the register.

The results of the study conducted by the Center for Responsible Living seem to echo these fears. Of the 1,000 bank customers that participated in the study, 60% say they opted in for the overdraft fee protection program because they did not want to pay fees if their card was declined.

Maybe it is simply the humiliation of having a purchase declined while at the register that has scared consumers into opting to pay the fee for the “if” and “when” transactions that may send their account balances into the red. So then it becomes the question of “Are customers reading the information wrong, or is the bank writing it in a confusing manner?”

All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Small Business Saturday Resonates With Consumers

Posted: November 21, 2017

If you know that November 25 is Small Business Saturday you are in good company because 61% of consumers know it is taking place too, according to the 2017 Small Business Saturday Consumer Insights Survey. Continue reading
Chase Adds Two New Point Transfer Travel Partners

Posted: November 20, 2017

Chase has inked a new deal with the Aer Lingus loyalty program, AerClub, and the Iberia loyalty program, Iberia Plus, making them their newest Chase Ultimate Rewards point transfer partners. This new deal lets eligible Chase credit ... Continue reading
Small Business Owners Optimistic and Going Digital

Posted: November 17, 2017

Optimism is up and on track among small businesses this quarter according to the new The Q4 Wells Fargo/Gallup Small Business Index, also finding that hiring is in the air for some of these businesses, along with upping their game when it ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the cash back earned at the end of your first year, automatically.
For Excellent, Good Credit
Our application is quick and easy with instant pre-qualification available
For Fair / Good Credit