Less than one-fourth of consumers have signed up for debit card overdraft coverage from banks, and 70% say they want to continue to exercise choice in their debit-overdraft options, suggest the results of a survey Consumer Reports publisher Consumers Union released Nov. 16.
Among the 1,014 U.S. adults who responded to the telephone survey the Consumer Reports National Research Center conducted Sept. 30 to Oct. 3, 22% said they opted to have their bank cover debit and ATM overdrafts for a fee, the Yonkers, N.Y.-based nonprofit organization says. Among all respondents, 16% said they had experienced an overdraft within the previous six months. Among respondents who experienced an overdraft within the last six months, 55% chose overdraft coverage, 39% opted against coverage, 3% took no action and 3% were not sure, the survey found.
Banks as of Aug. 15 were required to ask customers whether they wanted to opt in to overdraft-protection programs or risk having their transactions declined at the point of sale if their accounts lacked sufficient funds. Many banks previously provided the service automatically, and customers learned of the coverage only after seeing overdraft charges on their statements.
The average bank account overdraft fee is $27, according to the National Foundation for Credit Counseling.
The overdraft-protection changes are the result of new Federal Reserve Board rules and pertain to Regulation E of the Electronic Funds Transfer Act (see story).
“Now that banks are no longer allowed to automatically enroll customers into high-cost debit-overdraft loan programs, the vast majority of consumers are saying ‘no thanks,’” Pam Banks, Consumers Union senior policy counsel, said in a statement.
The consumer-advocacy’s survey findings suggest sharply fewer consumers are opting in to receive debit-overdraft coverage compared with the findings of some other organizations. The American Bankers Association in September, for example, said the results of a survey it conducted involving 1,010 consumers Aug. 14 to 15 suggested that 46% of consumers had opted in to their bank’s overdraft-protection programs, or had planned to do so (see story).
Consumers Union this week reiterated its contention that many banks are continuing to use “misleading” marketing tactics to trick consumers into signing up for costly overdraft services, despite the rule changes.
The organization is one of seven other consumer-advocacy groups that last month urged regulators to undertake “meaningful, substantive reforms” in debit-overdraft policies (see story).
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