Survey: 'Hidden' Fees for Overdrafts Hit at Least $10b

Summary

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Covering bounced checks and ATM withdrawals is turning into bigger business for banks thanks to a shift to automatic overdraft protection. The service, which banks call a courtesy, provide short- term loans that can carry hefty fees.

With about 80 percent of the nation's largest banks using automatic overdraft protection, according to the Consumer Federation of America, fees from this service have skyrocketed from virtually nothing a decade ago to more than $10 billion in 2004. The latter is based on a May report from the Washington-based Center for Responsible Lending. Including credit unions and other adjustments, the CRL believes those fees last year could have reached $22.7 billion - and the total is only going to go higher.

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Extract

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Survey: 'Hidden' Fees for Overdrafts Hit at Least $10b

Banks say automatic covering of overdrafts is an improvement from days when a banker would choose whether to honor draws against non- sufficient funds one check at a tim...

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