The Federal Reserve put new rules governing overdraft fees on debit cards into action this month. As of July 1st, banks are now required to give consumers the opportunity to opt-out of overdraft fees, and instead have their cards declined if they do not have enough funds, according to the Washington Post.
Previously, banks have been able to automatically charge overdraft fees, some of which could reach up to $40 for every transaction that was over the limit. Some banks have gone so far as to eliminate overdraft fees for purchases that only total a few dollars.
Many bankers said they saw the new legislation coming. "We heard time and time again, 'Don't let me spend money that I don't have,'" David Owen, head of payments business at Bank of America, told the news provider. Bank of America recently got rid of its overdraft programs altogether.
Financial advisers warn, however, that the reduction in credit card fees will be a financial blow to banks, which may soon start looking for other ways to charge consumers. Debit and credit card holders should be cautious and sure to read all fine print, according to the news source.
Those who find themselves overdrawing their account may be tempted to turn to credit cards to make payments, which can lead to large amounts of debt. Those who are trying to pay off credit card balances should form a regular budget and reduce their reliance on credit cards, according to MSNBC.