The financial institutions are going to get their deserved fate all the rest of this year, as the president's consumer-friendly laws start to clamp down on all the financial service providers in our lives. It makes you wonder why did Bank of America give in and yield voluntarily in a profitable areas as a way of dipping into your account - overdraft fees. The bank recently announced that it was eliminating it. At one time, if you didn't have enough money in your bank checking account and you used your debit card shopping, and you didn't have enough money in your bank checking account, they would let you purchase it anyway, and then penalize your with fees for the overdraft.

Now, if you try to purchase an item without enough cash in your account, you'll just be turned down, that's all. This is bad news for Bank of America since overdraft fees account from debit cards rake in 60% of the fees. And Bank Of America is the nation's largest debit card issuer. This is going to shave millions of dollars off its bottom line, and it's to do the same for other banks too that will have to match these terms to stay competitive.

You can still have an overdraft facility on your bank checking account if you choose; but it will be opt-in. If you happen to be at an ATM or a store checkout, and you're being billed for more than you have, the machine will tell you that you can go ahead, but at penalty of $35 in overdraft fees. And you can still have your overdraft facility for checks or bills for a fee. Banks charge $35 dollars and more for penalty fees, if you went over even two dollars more than you had.

For the banks, it's a windfall - if they put out money on a formal loan, they wouldn't make $35 off $2, now would they? 25 billion in overdraft fees was billed by the banks last year for overdrafts. This new practice is certainly going to effect their bottom line when it comes into effect on July 1. You know it hurts them, because they're advertising so hard to get you to opt in for their overdraft services.

Are the banks the bad guys? We want to give you the story. Some time ago I worked for a bank and felt bad because of the practices the bank foisted on its customers that I had to go along with. For instance, let's say that a customer has $100 in her bank checking account. She first uses her debit card to spend $10 at Burger King, she then spends $50 to pay her cell phone bill, and then she spends $102 on gas for her car. That means that with the first two purchases, she was completely within her limits, and she should be charged a penalty only for the last purchase. What they'll do at the bank though, is, they will charge her the $102 for gas first, so that it wipes out her account, they'll charge her penalty for it, and then they'll record the other two smaller expenses. That way, they get to charge for $35 penalties three times instead of just once, if they did it the right way.

But in their defense, the banks argue that they've been pushed to such unfair extremes in their industry. Banks have been made to comply over the years to consumer protection laws hurting their bottom line. They say they've been taxed and regulated to death for decades, and they have no choice but to do what they can to claw their way back into making a profit.

Another great source of fees for banks is the extra markups on personal checks given when customers order designer checks. Banks actually markup these checks by 50% or even more since they purchase them from a 3rd party source. By ordering direct and using designer checks online one can save even more plus one gets to choose from a larger selection of designs.

As such, these practices are not good; but they say that most of their rules are only to apply to people who overdraw. The simple way to avoid most of their unfair practices, they argue, is to simply live within your means.