TEXT OF INTERVIEW

Steve Chiotakis: Maybe this has happened to you: You buy a $3.00 coffee, put it on a debit card, the money’s not there, the card gets accepted anyway and with the overdraft fee, your coffee is now 38 bucks. Bank of America says that pricey java will soon be no more. The bank is getting rid of overdraft fees on debit card purchases… A move that puts the bank ahead of the game as new federal regulations take shape. Marketplace’s Alisa Roth is with us live in our New York studio to explain. Good Morning, Alisa.

Alisa Roth: Good morning.

Chiotakis: So B of A is doing this voluntarily. But this all sounds an awful like, an awful lot like what the government has been trying to put in place. Is this the same thing?

Roth: It’s similar. Starting July 1, the Federal Reserve will force banks to get permission from customers before they charge overdraft fees for ATM and debit transactions. Right now, a lot of banks just enroll you in the program automatically. A couple of bills have also been introduced into Congress that would take this even further. B of A isn’t the only bank that’s doing this by the way — Citigroup already won’t let you overdraft when you use the ATM or your debit card.

Chiotakis: Now if B of A is stopping it, and Citigroup doesn’t do it, I mean some in Congress are against it as well, what’s the problem?

Roth: Well the way it works now is that a lot of banks — including B of A — just automatically enroll you in their overdraft protection programs. But if you use it, the bank charges these huge fees. So as you referred to, you buy a sandwich with your debit card, you overdraft by a dollar and then you end up paying 40 bucks for it. So with the new rule, if you don’t have the $3.95 in your account, you swipe the card, the card gets rejected. Of course, you don’t get your sandwich, but you know, so it goes.

Chiotakis: Haha, yeah, so it goes. And so this is all about my ATM/debit card. I mean what about online bill pay? Will my transfer bounce if I have, say, my mortgage payment transferred out automatically every month?

Roth: Well in the case of B of A, customers will still have the option to enroll in the overdraft protection program. What surveys have found is that people are willing to pay fees if it protects big payments like the rent. It’s just that they’d rather get rejected if they’re going to end up paying 40 times the price for a coffee just because they don’t realize how much money they have or don’t have.

Chiotakis: Marketplace’s Alisa Roth reporting from New York. Alisa, thanks.

Roth: You’re welcome.