(MoneyWatch) Despite two-year-old regulatory reforms that demanded that consumers affirmatively opt-in to costly overdraft programs for debit transactions, more than half of the consumers who incurred an overdraft fee over the past year were surprised to find out that they had overdraft coverage, according to a new report by the Pew Charitable Trust.
Indeed, over one third of those surveyed were unaware that their bank even offered overdraft coverage until they incurred a penalty. Young and low-income consumers are the hardest hit, with consumers under the age of 44 and those with less than $30,000 in income twice as likely as older and wealthier consumers to incur overdraft fees, according to the report.
“I think there is a lot of confusion about opting in for overdraft coverage overall,” says Susan Weinstock, author of the report, who recommends a food-label-style disclosure that would lay out consumer options and costs for overdrafts at the time of opening an account.
A spokeswoman for the American Bankers Association said she was surprised that consumers said they were surprised by the overdraft fees. Bank notices that explain overdraft policies are clear, says ABA spokeswoman Nessa Feddis.
How could overdraft fees be so misunderstood? Read more at MoneyWatch.
