Rules that prohibit financial institutions from charging consumers fees for paying overdrafts on ATMs and one-time debit card transactions were announced today by the Federal Reserve Board. 

Unless a consumer consents, or opts in, to the overdraft service for those types of transactions, the new rules will protect them.

Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act.

"Overdraft fees can be costly," said Governor Elizabeth A. Duke, the chair of the Board's Committee on Consumer and Community Affairs. "Our rule will help consumers better understand the terms and conditions of overdraft services and will give them an opportunity to avoid fees when these services do not meet their needs."