Consumers urged to check if they opted out of overdraft fee protections

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A new reports shows that big banks make lots of money on overdraft fees, but there is something you can do about it. Varsha Nair of the Pennsylvania Public Interest Research Group says banks made $8.4 billion nationwide in overdraft fees in the first three quarters of 2016.  However if you use a debit card for purchases, you can avoid overdraft fees, at least when it comes to those transactions.

“In 2010 regulators did announce new overdraft protection rules,” Nair said.  “The rules prohibit banks from allowing overdrafts on debit and ATM transactions unless a consumer has affirmatively opted in.”

Nair says the rules mean your card will be rejected instead of an overdraft fee charged.  So this would end the phenomenon of consumers buying something for a few dollars with a debit card only to get stuck with a $30 overdraft fee.

“If you didn’t realize you opted in, didn’t understand the terms or now have decided that high overdraft fees aren’t worth it you do have the ability to opt out [at any time]” she said.

It’s best to double-check with your bank if you’re protected.  Overdraft fees still apply for bounced checks and online transactions.

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