For households that are facing some financial problems, tossing out bank pitches happens almost automatically. But over the past few weeks special letters are being sent out to customers by the Chase bank with an offer which the customers have been urged not to refuse. According to the warning in large red letters, the debit card of the customers may not work the same way as expected any more even if the customer has just made a deposit. After August 15th, everyday debit card transactions that overdraw on the limit will not be authorized even during the case of emergency.
Starting in the summer, bank must have the customers` agreement or so called opt in to a service which covers for purchases with a debit card where their account doesn`t have sufficient funds. According to the Federal Reserve`s rules, the same restriction applies for those customers who want to withdraw money from the teller machines and the account doesn`t have as much money as they want to. There are quite a few banks which provide the services at a fee of up to 35 dollars.
In fact, there are so many people who take their balances below zero that banks generated estimated total revenue of about 20 billion dollars from the overdraft fee on ATM transactions and debit purchases last year. A greater part of this revenue is at risk of being lost since the Federal Resserve regulations cover these two areas. In fact an additional 12 billion dollars are generated by the banks by covering the recurring bills and checks. However, that is not covered by the new regulations.
Over the last 10 years, the fees have become a critical source of the banks` income even as most consumers have been turning to their debit cards to pay for a whole range of purchases whether a gum pack or the monthly bills. Some banks even offer overdraft programs which are slightly less controversial as they allow customers to pull money from a savings account or credit card when their checking account has shortfalls. The current persuasion campaigns come at precarious time for the credit unions and banks as they are running around to find new streams of revenue during an economic crisis while new laws and regulations are threatening probability. In such a scenario, there are consultants going around now urging banks to hire them to convince customers to opt in.