Get Overdraft Fee Protection
By: Althea Chang

Bank account overdraft fees are rising and charges are being tacked on if you don't pay immediately, which could be more common now in a tough economy.

What You Pay
Currently, you might have to pay as much as a $39 penalty, according to the Consumer Federation of America, even if you spend a penny more than your bank balance.

On top of that, more than 60% of the largest banks charge “sustained overdraft” fees when consumers can’t repay the initial fee within a few days. What’s more, ten of the largest banks set no limits on the number of overdraft fees charged per day. TD Bank and US Bank limit fees to six overdraft and six insufficient funds charges per day.

Just one overdraft incident at Citizens Bank could cost you $109 in total if you don’t pay up within ten days, the Consumer Federation of America notes. However, Citibank (Stock Quote: C) and Washington Mutual - now a part of JP Morgan Chase (Stock Quote: JPM) - only charge a single $34 overdraft fee, according to the organization’s research.

Count it as Credit
Bank overdraft policies are a form of credit but are not disclosed or regulated as such, financial regulators say.

Consumers often use overdraft protection as a substitute for another form of credit such as a payday loan or credit card cash advances, but since they aren’t regulated like credit is, consumers may not be as careful with them as they would with credit cards, according to the Department of the Treasury.

But a proposed group, the Consumer Financial Protection Agency, could help ensure that consumer banks treat customers fairly.

Protecting You
A Consumer Financial Protection Agency, proposed as part of a massive overhaul of the financial system, would have the authority to regulate unfair, deceptive or abusive acts or practices.

That means, that it would have authority to require debit card issuers to warn consumers at a point of sale or ATM machine when a transaction would trigger an overdraft fee.

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