Using overdraft coverage is an expensive way to manage your
checking account, a Consumer Financial Protection Bureau study
Banks used to force people into overdraft programs until 2010,
when the Fed forced banks to make it opt-in only. Now, just 1 in 7
checking account customers opt in for the protection. And those who
opt for overdraft protection pay dearly for it: Their
monthly average fee was $29.09, quadruple the $7.26 average for
people who did not opt in, says the federal consumer watchdog
, released in July 2014.
Most people get hit with overdraft fees by using checks or debit
cards on transactions of $24 or less, the consumer bureau
found. The typical overdraft fee is more than that, at $34.
And when you consider that most overdrafts are repaid in three
days, the fee amounts to a whopping annual percentage rate of
The data were collected from several large banks with assets
over $10 billion. Information was gleaned from roughly 2 million
Feds change rules so consumers must opt in to
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