Banks want you to 'opt in'

People hate paying bank overdraft fees -- you know, the $35 the bank slaps on you when that cup of coffee you bought with your debit card exceeds the amount in your account. Most people would rather have their debit card denied instead.

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They'll soon get their wish. Beginning this summer, banks can no longer charge overdraft fees unless customers "opt in" for what's long been inappropriately called overdraft "protection." Under new federal rules, banks can no longer automatically enroll you without your consent.

Banks made an estimated $38 billion on overdraft fees last year, so -- watch out, folks -- they're coming up with incentives to get customers to sign up. One of those incentives is a reduction in overdraft fees.

If you opt in, that $2.50 cup of coffee will now cost you an extra $10, rather than $35 or so.

An article at SmartMoney provides details. Among the changes you can expect:

• Starting in August for those who opt in, US Bank will charge an overdraft fee of only $10 for transactions of $20 or less ($33 for larger overdrafts). Earlier this year the bank limited overdraft fees to only three a day and eliminated the fee on overdrafts of less than $10.
• Starting June 19 for new customers and in August for current customers, overdraft protection for debit cards will be a thing of the past at Bank of America, Flexo at Consumerism Commentary explains. Your purchase will simply be declined. But you'll still be able to overdraw your account via an ATM after being informed that it will cost you $35.

Meanwhile, banks have stepped up their marketing to get customers to opt in before the rules change. The opt-in rule goes into effect for new accounts starting July 1, and will apply to existing accounts -- those opened before July 1 -- on Aug. 15. The opt-in rule applies only to debit card and ATM transactions, not to automatic withdrawals or checks. Still, banks expect to lose a combined $1.9 billion in overdraft fees this year as a result, USA Today reports. In fact, Bank of America says the new rule may cost it $1 billion in 2010.

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Michael Dang of Bundle.com shared this account about his bank's pitch to get him to sign up:

Around 11:30 p.m. a few nights ago, I was jolted awake by a call on my cell phone. It was Chase Bank notifying me that I would be losing overdraft services soon and that it would probably be beneficial for me to opt in so that they could cover for me if my account was overdrawn.

I had never overdrawn my account in my life so I said, "No thanks," followed by, "You know, you shouldn't be calling people this late. Good night!"

Jean Ann Fox, director of financial services for Consumer Federation of America, offered this advice in an article at AJC.com: "Don't let your bank scare you into signing up for something that is so unfair to you and lucrative to them."

I won't be opting in, but many others aren't listening. At least that's what a number of banks told The Ledger newspaper in Florida. Strange, because, according to a fairly recent FDIC study, 75% of customers hadn't overdrawn their accounts in the last year. It appears that most people don't need this "protection." 

And, if you do, there are alternatives, like real overdraft protection.

Has your bank asked you to opt in? What was your response?

More from MSN Money:

• Banks need customer consent for overdrafts
• Should you opt in for overdraft protection?
• Watch for sneaky new bank charges
• Decline my debit card, please