New Credit Card and Overdraft Restrictions Cut Bank Fees by $5B

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Credit card overhaul cuts bank fees.

New credit card and overdraft restrictions will save U.S. consumers from being charged at least $5 billion in fees this year alone at the largest U.S. retail banks and credit card companies, a USA Today analysis reveals.The analysis — based on institutions’ own estimates — comes during a year when new rules are kicking in to address unfair credit card rate increases and steep bank overdraft fees. It highlights the sizable dent these rules will have on an industry blamed for pushing consumers deeper into distress during the recession.

 

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Federal Reserve Will Limit Overdraft Fees Charged By Banks

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The Federal Reserve released a long-awaited rule Thursday requiring banks and credit unions to get consumers’ permission before charging steep fees to pay debit card and ATM overdrafts.The final rule, which comes amid intense congressional scrutiny of bank overdraft practices, will take effect by July 1, 2010, for new customers and Aug. 15, 2010, for existing customers. The Fed released a preliminary rule on debit card and ATM overdrafts late last year, but didn’t say then if it would require banks to get consumers’ consent before signing them up for these programs.

 

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‘Courtesy Loans’ Big Money For Banks, Abusive to Customers

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Even as regulators crack down on abusive mortgage and credit card practices, another type of lending threatens to mire consumers in a credit trap.It’s called “courtesy overdraft” and has long been used by banks to automatically pay transactions that account holders don’t have the money to cover — and then charge them a steep fee. For years, banks have made it easier for customers to overdraw their checking accounts, aided by a cottage industry of consultants who make big money by helping to wring fees out of consumers, a USA TODAY analysis finds.

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