A year after the Federal Reserve enacted new rules to rein in abusive bank overdraft practices, fees remain high and some institutions actually have slapped on additional penalties, according to a new survey of the nation's 14 largest banks by the Consumer Federation of America.

Last year, the Fed prohibited banks from enrolling consumers in overdraft protection programs unless they choose to "opt-in." Previously, most banks automatically covered payments that exceeded the account balance, charging a fee for each offense, along with additional fees if customers didn't quickly repay the loan quickly. While the rules have helped, major issues remain, consumer advocates say.

"The Fed's rule cut the number of people who participated in these programs, but for the people who do opt in, there's no limit on the size of fees or the number of overdraft fees (banks) can charge," says Ed Mierzwinski, consumer program director with U.S. PIRG, the federation of state public interest research groups.

The median overdraft fee is $35, unchanged from last year, and customers can incur anywhere from three -- at JPMorgan Chase (JPM) -- to 10 -- at Fifth Third Bank (FITB) -- of these fees in a single day, according to the study. In the last year, BB&T (BBT) doubled the number of overdraft fees it charges per day to eight, while Regions Financial (RF) raised its daily limit from four to six per day, the survey found. Only TD Bank (TD) reduced the number of fees per day from six to five.

How Some Banks Milk Overdrafts

In addition, the Fed rules don't prevent "reordering," in which banks pay the largest checks and debits first in order to trigger additional fees. The practice remains widespread, the survey found. Here's how it works: A consumer thinks she has $1,200 in her checking, but only has $1,100. She conducts five debit transactions totaling $200 and then pays her rent with a check for $1,000. She has overdrawn the account by $100. Two weeks later, when the consumer deposits her paycheck, the bank gets its money back.

When all six transactions arrive at the bank, the bank processes the rent payment first, followed by the biggest debit transaction of $100. Four smaller debits bounce, resulting in four separate fees for $35 each, or $140. Had the rent been paid last, the customer would only have been on the hook for $35.

Three banks changed their procedures, the survey found. Citibank (C) now processes checks smallest to largest and will begin processing debit payments in the same way in October. Fifth Third and Wells Fargo (WFC) also made changed the order in which some transactions are paid, which should lessen the number of overdraft fees their customers pay too.

Bank of America (BAC) recently settled a class-action lawsuit related to the way it processed transactions, setting up a $410 million fund to reimburse customers.

Either way, if it takes two weeks to repay the overdraft loan -- such as in our example above -- customers get hammered with more fees. Two-thirds of the largest institutions layer on additional fees if consumers don't settle up in just a few days, the survey found. SunTrust (STI) charges a second $36 fee after seven days, for example, while JPMorgan Chase adds $15 after each five-day period an overdraft remains unpaid. RBS Citizens (RBS) charges $6.99 per day on the fourth through thirteenth day an overdraft is not repaid.

The Bottom Line for Consumers

All together, our example consumer would end up paying the equivalent of an 884% annual percentage rate in fees at Citibank, and a whopping 2,779% APR in fees at RBS Citizens Bank. (The Fed has ruled that overdraft fees are not considered finance charges that must be disclosed.) All 14 banks offer cheaper alternatives to overdraft protection, such as transfers from savings or credit cards and overdraft lines of credit.

Mierzwinski hopes the new Consumer Financial Protection Bureau (CFPB), which has regulatory authority over banks with more than $10 billion in assets, will step in to address the harmful practices that the Fed's rules don't cover.

"As of last month, the CFPB can supervise these banks, and supervision is a powerful tool," Mierzwinski says. That's the best hope for protecting consumers in the financial marketplace." As for new rules, "don't expect anything in less than a year," he says. The CFPB didn't return calls seeking comment.

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Anyone who overdrafts should sue their 3rd grade arithmetic teacher.

August 14 2011 at 9:51 PM Report abuse +1 rate up rate down Reply

Those Monickers will whoop ur azz every time,ask Evan.

August 14 2011 at 6:48 PM Report abuse +1 rate up rate down Reply

How much money did the TAXPAYER just give the banks?????????????? And they think THEY can tell US what is going to be??/ How about you pay back each TAXPAYER the $17,000+ for the opportunity to stay in business??!!!

August 14 2011 at 5:42 PM Report abuse +1 rate up rate down Reply
1 reply to PandaMan9's comment

Taxpayers did not GIVE banks money. Instead, the government LOANED banks money. And the banks have repaid the loans.

While it may have been a bad idea for government to bail out banks, the blame for that bad idea resides squarely on the shoulders of the knuckle-draggers who made the loan. If taxpayers want paid back, they should demand repayment from the Foggy Bottom goons who made the loan.

August 14 2011 at 6:31 PM Report abuse +1 rate up rate down Reply
4 replies to warrenbent's comment

Thank goodness the government is around to protect us from "abusive overdraft fees". How about throwing a person in jail for writing an I.O.U. on a piece of paper with money they do not have? Would that be abusive? Maybe. More nanny state protecting the "innocent" from "abuse".

August 14 2011 at 5:41 PM Report abuse +2 rate up rate down Reply

There's no problem if you don't bounce checks, or make transactions you don't have the money in the bank to cover. I've never done either, going without when I knew I didn't have the money to cover the cost. It's much easier now as you can check your account balances online.

But I know, it's not easy when you're in a financial bind due to any reason, and the rent check, utilities, etc come due. The problem is, that under these circumstances, it costs you a lot more for everything due to those late charges, overdraft fees, increased interest rates, and sometimes the utilities insist on a new deposit for continued service if you're late with a utility payment twice in a specified period of time.

August 14 2011 at 12:53 PM Report abuse rate up rate down Reply

No one pays a penny to any bank if they put money in, then take it out. So you don't know what you have - I bet internet banking is free at your bank. And keeping track of your money is up to you, not the bank.

It is interesting to note that banks with the FDIC as their regulator were told to stop the high to low way of processing checks a few months ago, and they have. That did not make the story - of course we have 7000+ banks in this country, plus credit unions, etc., and the focus is always on the top 5 banks. How about research regarding banks in the $300 million or less range - but then there would be no story.

August 14 2011 at 11:53 AM Report abuse rate up rate down Reply

Another failure of the ob leftists that is costing cash strapped AMericans due to the false pretense of the white house that it knows what it is doing

August 14 2011 at 11:18 AM Report abuse +2 rate up rate down Reply

Overdraft bank fees are incurred when the customer makes an error - why should the bank have to pay for the customer's error. That's right - we are now in the socialist society where the government is supposed to take care of us. BS I will handle my bank accounts as I always have and never incurred an overdraft fee. If it is a bank error that caused the overdraft, they will fix it - the order of check progressing is their perogative IMO. If you never bounced a check on your account before and it happened once, I doubt there is a bank in the country that would not waive the fees ONCE. Be responsible for yourselves - PLEASE!!!!!!!!!!!!!!!!!!!!!!!

August 14 2011 at 9:35 AM Report abuse +3 rate up rate down Reply
3 replies to Jim's comment

I'm sorry but this kind of proves that consumers are the primary problem. You should be in my shoes for a while and no matter how many times I try to educate my bank customers: most of them do not want to listen. Everybody wants instant gratification and they will do whatever it takes to get them. These people KNOW how the process works and they will threathen to take their accounts else where if the banks don't rebate the overdraft fees. Banks end up being the bad guys regardless. Here are a couple of tips if anybody is reading this. Most online banking services will reflect a balance that do not include outstanding charges. 1. Use the register booklets and then look at your transaction history online. (Especially, if you're looking at your online profile days or weeks after you've overdrafted). 2. Enter your check deposits in the register booklets on the day it's available and not the day you deposit them. Whether you like it or not, there's always going to be hold against a check deposit. Sometimes a hold will last up to weeks. 3. Deposit cash through a teller. Some banks may place a hold if you deposit them through an ATM. 4. Be nice to the telephone representatives. We have families to support and we don't like stress anymore than you do.

August 14 2011 at 8:49 AM Report abuse +2 rate up rate down Reply
1 reply to tbillsr's comment

Our bank doesn't hold our checks, perhaps because they are mostly direct deposit. I'm surprised that even the checks we put in via the ATM are available the next day, and they don't even hold out of town checks (credited to account within a day of deposit) Fortunately we don't live paycheck to paycheck so there's a bit of a buffer there, I've always balanced our checkbooks regularly so we know what we have (and it's easier these days with online banking), and we don't make transactions we don't KNOW we have the money to cover, so overdraft fees aren't an issue here at this point.

August 14 2011 at 1:10 PM Report abuse rate up rate down Reply

Im old enough to remember when banks used to pay us for our accounts, and they all remained solvent. Over the last fifty years, banks have learned to charge for everything, including charging us to deposit money in their bank so they can turn around and loan it to someone else to cover a NSF's check. Then they learned to charge both ways. Money has become the most expensive comodity money can buy, and these same banks had the nerve to cry for a bailout when they went broke....Where is all this money going????Usury laws have always been on the books in my lifetime, but they only apply to "interest" and banks quickly learned to change their terminology to "service charge", which makes usury look small by comparison.

August 14 2011 at 5:57 AM Report abuse +2 rate up rate down Reply