Banks need customer consent for overdrafts

In a win for consumers, banks will have to secure customers' consent before charging exorbitant overdraft fees on ATM and debit card transactions, The Associated Press reports.

In other words: No more $35 charges against customers who accidentally overdraw their accounts for a $4 latte.

The new Federal Reserve rules announced Thursday require banks to notify customers of their overdraft services and give customers the option of being covered. If customers don't "opt in," any debit or ATM transactions that overdraw their accounts will be denied.

The changes take effect July 1. Overdrafts fees for checks and electronic payments are not prohibited by the new rules. Details can be found here.

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Fed officials say banks earn as much as $25 billion to $38 billion annually from overdraft fees, the AP reported. That total includes check overdrafts.

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

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