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Credit Card Applications » News » Other » Dodd Offers Protection from Overdraft Fees

Dodd Offers Protection from Overdraft Fees

December 10, 2009
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Senator Christopher Dodd, the Senate banking committee Chairman, proposed a new bill last Monday to protect checking account consumers from excessive penalties.

This new congressional measure will give customers a choice in whether they will participate in overdraft programs that will charge rates for automated teller and debit card transactions.

Most banks today automatically enroll customers in overdraft programs and charge each with a fee if they spend more than what is in their account. The rate usually ranges from $25 to $35, even if the excess is just a few dollars. Unwary customers who make overdrawn purchases in a day could be charged a $35 fee for each transaction.

In anticipation of the said bill, some major banks said they would advise customers to opt out of these programs, and some vowed to lower their fees.

Senator Dodd's proposed legislation would require these institutions to get people's consent first before enrolling them in overdraft protection programs. The bill would limit the number of fees that these financial institutions can charge, to only one per month and six per annum.

Moreover, Dodd's proposal intends to require that the excess balance fees should be proportional to cost of the processing. Customers would also be notified when they overdraw their account, and warned if an ATM or teller transaction will overdraw their account.

The bill further prohibits banks from sending negative reports to their consumer credit report agencies if an excess fee is paid under the program.

The proposal would follow the same legislation enacted into law last spring, in order to protect account holders from high interest rates and penalties charged by credit card companies. Congress is also trying to make a legislation to increase consumer protection for other financial transactions.

Sen. Sherrod Brown, D-Ohio, one of the proponents of the said legislation, revealed that since taxpayers helped stabilize the financial services industry, banks should not slam these taxpayers with billions of dollars in overdraft fees in return. He further said that just last year, Ohio consumers paid nearly $900 million in overdraft charges.

Sen. Dodd noted that after the announcement of the bill, Wells Fargo, Bank of America, and JPMorgan Chase, said they would make moderate changes in their programs.

Rep. Carolyn Maloney, D-N.Y., also introduced a similar legislation in the House.

As of Monday, Bank of America said it would not charge an initial fee for overdrafts under $10. Consumers would still be charged the $35 fee for not bringing the account into balance within five days.

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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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