Bank of America Announces a New Plan for Taking Money from Those Who Can Least Afford It

Recently, Bank of America announced a new debit card where card holders will be charged $4.95 per month for overdraft protection.  The pitch to cardholders is that if they overdraw their accounts they will not rack up sizable overdraft fees.  On the surface, this might sound like a good deal to people who keep a low balance in their account and worry about accidentally triggering overdraft fees. But, the reality is quite different.  That’s because bank customers can’t overdraft their accounts unless they opt in for overdraft protection.  Gone are the days when banks could opt you in (without your knowledge) for overdraft protection  and then charge you hefty fees ($35 per overdraft)  for going pennies below your balance when you use your debit card. Allowing unaware customers to overdraft their account and then forcing them to pay $35 for this “privilege” mobilized consumers and their advocates to press for reform.  Thanks to banking reform legislation passed in 2010 (which Green America and its members supported), bank customers have to opt-in for overdraft protection.  If they don’t opt-in for the protection, and they attempt to overdraft their account, their card is simply rejected and no fee is charged.  Unfortunately, many consumers don’t understand this.  A 2011 survey of consumers who opted in for overdraft protection found that 66% of them mistakenly signed up for the service because they thought that if their debit card was rejected for trying to make […]

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