Fed to Curb Banks Overdraft Fees

The Federal Reserve made a surprising announcement today regarding bank overdraft fees, which have become a major source of profits for banking institutions. By October 2010, they will be required to have customers sign up for an overdraft program in order to charge them fees. According to ABCNews.com some banks have already begun changing their accounts, and the rest have less then a year to follow suit.

The Federal Reserve today announced new rules that will ban banks from charging overdraft fees on debit card and ATM transactions unless a consumer opts in to an overdraft program.

"The final overdraft rules represent an important step forward in consumer protection," Fed Chairman Ben Bernanke said in a statement. "Both new and existing account holders will be able to make informed decisions about whether to sign up for an overdraft service."

Overdraft fees can result in consumers being charged up to $35 for withdrawing more money than they have in their accounts. Under the Fed's rules, all consumers -- including existing account-holders -- would have the choice to sign up for overdraft services.