Readers have emailed me examples of the hard sell their banks have been making regarding overdraft coverage. Here's an example from Chase which puts a very favorable spin on overdraft coverage:
You have a choice about Chase Debit Card Overdraft Coverage
It's a feature that may allow your everyday debit card transactions to be approved at Chase's discretion, when you don't have sufficient available funds to cover it. You may find it helpful if you need to make an unexpected purchase (Standard overdraft fees may apply). Learn more now!
The Federal Reserve Board passed new regulation that will soon fully take effect which will make it much more difficult for banks to make money from overdraft fees. Here's how the FDIC describes these new rules:
financial institutions will be prohibited from charging fees for overdrafts on ATM withdrawals and one-time debit card transactions at "point of sale" (POS) terminals in stores unless the individual agrees up front ("opts in") to pay those fees.
I've seen other banks and credit unions making the same pitch. I don't know why anyone would want this coverage. I doubt there's one in a 1,000 who would prefer to pay around $35 just to be shielded from the "embarrassment" of having a purchase at a checkout counter denied due to insufficient funds.
Unfortunately, this regulation and the soon-to-be interchange fee restrictions for debit cards will likely hurt savers as banks try to make up for the loss of revenue by adding new fees and lowering deposit rates. I'm particularly worried about reward checking accounts. However, I would think these new regulations won't have too much effect on many of the internet banks which probably make much less on these fees than brick-and-mortar banks. Hopefully, it will remain easy to find free internet checking accounts and high-yield internet savings accounts (high-yield in relative terms).