This practice, according to USA TODAY research in 2006, often triggers more overdraft fees than if banks paid the transactions in the order they were received. The Fed has also asked for comments on banks' processing of transactions from high-to-low dollar amount. The Federal Reserve has proposed a rule to give customers the right to demand that banks deny transactions that overdraw their account. Leslie Parrish, senior researcher at the Center for Responsible Lending, argues that this is "another way (for banks) to manipulate account holders' balances to spur more overdraft fees." Banks defend the practice, saying it provides customers with accurate information about account balances.īanks' changes come as regulators weigh whether to crack down on overdraft practices. (By contrast, PIN transactions typically clear immediately.) That meant that, while the signature debit transaction was pending, consumers could often deposit money to cover any potential overdraft. ![]() Previously, you didn't get charged this fee unless you were short of cash when the signature debit transaction cleared a few days later. Here's how it works: If you pay with your debit card, some banks will now charge you a fee - $35 or more - if you don't have funds in your account at the time you sign for the purchase. SunTrust, among other banks, has been doing it for a few years. Now a growing number of institutions are charging customers such fees even before the transaction overdraws their account.īank of America and TD Banknorth started doing it earlier this year. — - For years, banks have charged customers hefty fees for overdrawing their checking accounts.
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