Sky Isn't Falling but Overdraft Fees Should

“These are the times that try men’s souls.” This was the battle cry that heralded the American Revolution over 200 hundred years ago. No words are more apropos than these regarding the changes and controversy swirling around overdraft services today.

The landscape for overdrafts is changing dramatically as a result of the Federal Reserve announcement May 2 proposing major regulatory changes. Missed the announcement of these sweeping changes? You are not alone. Because the Fed announced changes relating to credit card, debit card and overdraft services at the same time, overdrafts and debit cards ducked under the radar of both the consumer press and many trade journalists. The comment period on disclosure changes in Truth-in-Savings closed July 18 and by Aug. 4 for opt out and debit card overdraft fee changes in Reg AA.

The major changes proposed include mandatory disclosures of not sufficient funds and overdraft fees every month and year-to-date on checking statements and notices, open communications and advertising, and no more combining ledger and overdraft limits, among many intriguing changes. If you keep consumer interests and your institution’s in balance, the changes are beneficial. Otherwise, your overdraft revenue is in for a shake up.