Avoiding Debit-Card Fees: One Man's Quest : Planet Money Banks stand to lose billions if consumers leave debit-card overdraft protection programs.

Avoiding Debit-Card Fees: One Man's Quest

Over the years Joel Riddle has spent thousands of dollars on overdraft fees.

Sometimes his bank balance is lower than he thinks. And when he uses his debit card to buy something that costs more than what he has in his account, his bank charges him a $35 fee.

So Joel, who works for NPR, was happy when he learned that Bank of America started letting its customers change the way overdrafts are handled. Rather than getting charged, customers can choose to have their debit-card purchases be automatically denied when they try to buy something that costs more than they have in their account.

But when he called B of A to make this change, the person he talked to on the phone started telling him that he could still be charged overdraft fees. (As it turns out, this could occur in rare cases, because certain merchants preauthorize a debit card transaction even if the customer's account contains only some minimal amount that's not enough to cover the full purchase.)

Anyway, the lady on the phone kept giving Joel some weird example about buying gas. He doesn't have a car, and kept asking her for other examples, but she kept returning to the gas thing.

"I felt that Bank of America was intentionally trying to confuse me," Joel said. He thought the bank was trying to get him to keep overdraft protection.

Joel emailed us after he saw a story in yesterday's New York Times about how banks are trying to get customers to keep paying overdraft fees. And for good reason: Banks made some $20 billion from overdraft fees on debit purchases and A.T.M. transactions last year, according to the NYT.

What's more, under a new law that takes effect this summer, overdraft purchases with debit cards will be automatically denied. People will have to sign up for overdraft protection if they want to be able to buy something that costs more than they have in their account. That means banks stand to lose a lot of the money they've been making from overdraft fees on debit-card purchases. (The new rules don't affect old-fashioned paper checks.)

After we heard from Joel, we called Anne Pace, a Bank of America spokeswoman.

"We are not trying to encourage customers to remain in overdraft services," she said. "What we are trying to do is ensure that customers understand the implications of opting out."

In particular, she said, consumers should know that even if they opt out of overdraft protection, there may be some instances when they still wind up overdrawing their accounts and incurring a fee.

Have you heard from your bank about overdraft protection? Let us know in the comments section below.