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 New Financial Regulations - Can Someone Explain The Impact?

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UrRight



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PostSubject: New Financial Regulations - Can Someone Explain The Impact?   7/17/2010, 12:43 pm

Banks eye higher fees to boost declining revenue

http://finance.yahoo.com/banking-budgeting/article/109980/whats-behind-those-urgent-notices-from-your-bank?mod=bb-budgeting

Unfortunatly, the Topic - the link to my topic disappeared..but I found the following under Consumer Reports.

What's Behind Those Urgent Notices from Your Bank
by Mandy Walker
Thursday, July 1, 2010
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Visit a bank's website these days and you're likely to see an urgent-sounding notice. "At Sovereign, we know our customers don't need the hassle and potential embarrassment of having a debit card purchase or ATM withdrawal denied due to insufficient funds," says Sovereign Bank's site. "It only takes a moment to stay protected," says SunTrust. "Don't lose the convenience of this important feature. Talk to a banker today," urges Chase. You may have seen similar messages on your bank's website, ATM screens, in branches, and in your account statements.

[Click here to check savings products and rates in your area.]



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What's all the hubbub? New Federal Reserve rules go into effect July 1st that require banks to get new customers' permission before enrolling them in debit overdraft protection plans (existing customers must also opt-in but the effective date for them is Aug. 15). Before these rules, your bank likely enrolled you (without giving you any notice) in an overdraft protection plan that covers check, ATM, and debit card transactions that exceed your checking account balance. Sounds great—except that for each overdraft you'd be hit with an exorbitant fee.

Overdraft programs are really high-cost, short-term loans with quadruple-digit APRs. Most banks charge flat overdraft fees. So if your balance goes to zero purchasing even a $1 pack of gum with your debit card could trigger a fee of $35 or more. Once you've exceeded your balance, every purchase you make could generate another fee. And, some banks still impose long hold times before you can use the money from checks you deposit, which increases the possibility that you will overdraw your account.


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In addition, many banks process transactions from the highest to the lowest amount, which depletes customers' accounts more quickly and triggers more overdrafts. Some customers have complained they didn't know about the service until they got the bill.

The New Deal

Though the messages on the bank websites, ATMs, and in your statements couch overdraft protection plans in terms of your convenience, by opting in—either in a new account or with your existing one—you're giving the banks permission to gouge you if you overdraw your account. Do nothing, and ATM withdrawals or debit-card transactions for more than the amount you have in your account will simply be rejected and no fee will be assessed.

"Consumers should just say no to these astronomical fees," says Jean Ann Fox, director of financial services for Consumer Federation of America, which released a report [PDF] yesterday that shows overdraft fees and how they translate into APRs for the largest 15 banks that charge them.

Unfortunately, the law does not cover overdrawn checks or automatic payment programs used for recurring bills, such as rent, mortgage payments, or utilities. And the Fed rule doesn't limit the size of fees banks can charge, which means consumers who sign up for overdraft services could still owe a bundle on small overdrafts. Consumer's Union, the nonprofit publisher of this blog, offers more information on overdraft fees on its blog, Defend Your Dollars.

Cheaper Ways to Cover Overdrafts

Overdraft fees generate billions in revenue for banks each year, which explains the urgency of those messages you see. But there are other less-costly ways to avoid having your debit card rejected at the register, including:

• Link your checking account to a savings account. If you overdraw your checking account, money in your savings account is used to cover the transaction. Banks typically charge a fee to transfer the money, but it's usually just $5 to $10—much lower than the fee charged by overdraft programs.

• Set up low-balance alerts. Many financial institutions will send you an e-mail or text when your balance reaches the danger zone.

• Sign up for online banking. Regularly monitoring your checking account online will help you avoid spending money you don't have.

• Get an overdraft line of credit with your bank or credit union. You'll need to apply, and customers with poor credit may not qualify. But if you're eligible, this could provide a less expensive form of overdraft protection than fee-based coverage.

___

Here's my question: After 20 plus years with a neighborhood bank, it became an issue of inconvenience because of the scant locations.

So, I opened up a new acct at Chase, and they offered me a typical credit/debit card...or the next one up, that required a $25.00 fee to "make sure you are denied if the funds are not available." I thought to myself, "Ok, that's better than having to go online or check the atm to see where I am at - cuz, love it or not, I forget to record spontaneous transactions, and usually keep it in my head."

Well, the way I read the above and the other one off the Drudge Report, there is something else behind it: They pay your overdraft (which I never had one in many, many years). but charge enormous fees for the cover-up paying for your overdraft transaction.

That's not what I was told when opening the acct. I was told for $25.00 a year, they will make sure you never go over your balance...they simply will deny it, saving me fees. Since I travel a lot, I thought this was good for me because there are no choices of banks in Indiana where I go downstate, or in the rural area where my parents reside.

Can someone explain (on my level - ya'll know me, I have no patience), what the hell all this means? Was I mislead this past spring when I transferred from a small bank (Hegewisch) to Chase, and the rules are now different?

Why would they charge anyone for paper statements, when most institutions or certain ones, require that? Why make old people pay for that - when they don't do online services? Are they saying we have to pay $8.00 to drive up to a teller and $8.00 for a paper statement?

If so, I'll just pull out all my money at the beginning of the month and screw them.

The banking industry gets a hand-out from the tax-payers, and now they are socking it to us? I don't get it.
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UrRight



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/17/2010, 12:45 pm

My take is there won't be any tellers needed - or clerks. That will diminish the workforce further, right?

Im thinking of going to a credit union to avoid this stuff.
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KarenT



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/17/2010, 2:58 pm

My old credit union offered free overdraft protection - just pulled any $$ from savings if checking hit 0. It only happened once - when a deposit had a different date than I figured. New credit union doesn't offer that - neither does our bank.
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UrRight



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/17/2010, 7:38 pm

Thanks, Karen...but from the other article I read, you will be charged I believe, $8.50 each, for either pulling up to the window or wanting a paper statement.

How is that legal, when the gov't demands from me - through SSA, every statement for every seven years...showing what I did with the measly money I'd rather not take?

They tell you, "If you are unable to present the past seven years' statements from your bank, we can help you obtain it". Now, that's another gov't waste in my eyes.

When I last went to be reviewed, I hauled in all seven years of statements, and they didn't even look at them...that didn't make sense. The only relevent question was..."Do YOU use a CURRENCY EXCHANGE?"

I said, "Hey, you asked for seven year's of checking account statements, here they are...why are you asking me if I use a Currency Exchange..." She smiled, and said, OK, you're done!

What the fluck???
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KarenT



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/17/2010, 9:51 pm

Not to sound stupid, but what is SSA?
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Artie60438

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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/18/2010, 6:18 am

SSA:Social Security Administration
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KarenT



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/18/2010, 8:59 am

My parents never abbreviated it.
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Artie60438

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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/18/2010, 11:34 am

They probably never posted on message boards.
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KarenT



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/18/2010, 11:49 am

Good point - although I probably would use SS. The A (and I in another post) confused me. I thought maybe one was disability or survivor benefits.
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Artie60438

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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/18/2010, 3:21 pm

SSDI is for disability. SSI is like welfare. It's for people that never worked long enough to qualify for SSDI. enough
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KarenT



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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/19/2010, 4:07 pm

Thanks - we're boring, just wait until we get old to collect.
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Artie60438

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PostSubject: Re: New Financial Regulations - Can Someone Explain The Impact?   7/19/2010, 4:26 pm

KarenT wrote:
Thanks - we're boring, just wait until we get old to collect.
We may be waiting a bit longer to collect. Crying or Very sad
Top Republican: Raise Social Security's retirement age to 70
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