The Federal Reserve beat the Federal Government to the punch on ATM overdraft charges. Banks will have to secure their customers’ consent before charging large overdraft fees on ATM and debit card transactions, says the AP News.
Payday Pundit makes a good insight on this move by the Federal Reserve:
“The Fed, of course, objects to the creation of the CFPA so is trying to demonstrate that it has teeth before Congress takes away some of its responsibilities.”
If you think that bank overdraft fees are a necessary evil, you should be able to understand the need for payday loans.
Both products carry similar APRs, but different stigmas. Overdraft fees have no disclosure and the bank customer has absolutely no say. Payday loans, on the other hand, are a very straight forward and easy to understand product. With a payday loan, rollovers can extend the loan to about 8 weeks, if it’s not paid in full.
If you give a choice to borrowers between overdraft protection and a payday loan. I bet most people choose a payday loan. If anyone can think of a reason, not to, let me know.
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