Debit Cards' Hidden Fees

When Lauren Tee, a college student from Atlanta, checked her bank account recently, she was caught by surprise.

"So this is your bank statement?" CBS News correspondent Anthony Mason asked.

"Right," Tee said.

She was slightly overdrawn.

"I was at the supermarket, spent $25, went over my account balance $5," Tee explained.

Without telling her she was overdrawn, her bank covered the $5, but charged her $25 for that loan.

"I think they're sucking money out of the consumers," she said.

Banks are cashing in on overdrafts, raking in more than $17 billion in fees last year, according to the Center for Responsible Lending — up from $10 billion just two years ago.

"And the single largest use of overdrafts was using your debit card. And those debit card purchases are very small," said Eric Halperin from the Center for Responsible Lending.

The average overdraft is about $16. The average bank fee, $34 — for a loan that is typically paid off in less than five days.

"If you were to calculate an annual percentage rate interest for that loan, it would usually be well into the five digits. So more than 10,000 percent," Halperin said.

What's more, these overdraft loans aren't covered under the Federal Reserve's Truth in Lending Act, so banks and credit unions aren't obligated to tell you about those astronomical interest rates.

Rep. Carolyn Maloney, D-N.Y., said: "Consumers should have the right to decline this service and the fee."

Congress today began considering legislation to give customers more information and protection. But the banks said the burden should be on the account holder.

"At the end of the day only the consumer does know their balance," said Nessa Feddis of the American Bankers Association.

You can instruct your bank not to pay overdrafts to avoid those exorbitant fees.

Banks used to discourage "insufficient funds," but now they've become a profit center.