I haven't been keeping a close eye on the national debate about reforming banks' outrageous overdraft fees, so when a letter arrived from my credit union this month saying something about the overdraft laws changing, my main response was... what? I know that banks make a bundle off the fees ($26 billion a year, actually). And I know that I hate overdraft fees with a fury normally reserved for TicketMaster, but since I cancelled my Bank of America account in January and switched to a credit union, I wasn't sure whether the new rules were good for me, bad for me, or even applied to me.

This afternoon, I met up with OSPIRG advocate Jon Bartholomew. I'm one of the legion embittered ex-OSPIRG canvassers, but they did good work on financial reform this year, including putting together a report about the "tricks and traps" of banking in Oregon. Bartholomew (who, bonus fact, met his wife via the personals of our sister paper, The Stranger) walked me through the brave new world of overdraft fees.

Q: So what are the rules exactly? Can you just give me a rundown on what they actually mean? Well, first off a new rule came into effect last weekend that says banks can no longer automatically put you into their overdraft program for debit cards and ATMs.

So let's say you have $10 in your account and you go to try and get $20 out of an ATM. What banks have been doing is putting you into a program where they'll give you your $20 from the ATM, but then they'll hit you with a $30 fee. What used to be the case in the past is that you just wouldn't get your $20. That's the situation people will be in now if they don't opt in to the overdraft program. The new rules don't apply to checks, so you will still get a $30 fee if you write a check and it bounces, or if you have an automatic withdrawal and there's not enough money in your account, but you won't be dinged for withdrawing too much on an ATM and debit cards.

Why focus on overdraft charges specifically? There's a lot wrong with the financial system. Because they're a manipulation by the banks that consumers often don't know about. If you bounce a check, that's your responsibility, you should be fined. But a lot of consumers don't know that banks their banks are forcing them into overdraft programs and are reordering purchases to cause more fees. That's deceptive.

What's "reordering purchases" mean? Banks have made overdraft fees worse by reordering your debits. Let's say you make five purchases in a day and you start off with only having $100 in the bank. Your first 4 purchases were, let's say, coffee, McDonalds, food, all coming to less than $50. Then you go to Target and spend another $90. What banks used to do is reorder your purchases so that the big one would go through first, and you would get hit with three or four fees instead of just once.

Consumers have no idea that their banks are reordering their purchases. A judge in California just ordered Wells Fargo to stop doing this, but Bank of America is currently still doing this.

Okay, I opened my account in January and I don't remember whether I chose overdraft protection. Do people with existing accounts still have to opt-out? Like, does this just affect new customers?
If you are in an overdraft protection plan, you will automatically be removed from it, unless you opt in. This means that some consumers will suddenly find that their card won't work and they can't buy that latte, but it's better than overdrafting and getting charged $30.

Previously, some banks didn't even allow you to opt out of overdraft programs. Many banks said 'Sorry, no, this is part of our business and if you don't want to be in the program, you have to switch banks.' Now they can't force you into it, and at any point you can opt back out.