Like most college students, Curry Andrews uses her debit card frequently.

The junior from Atlanta regularly makes small payments for items such as a cup of coffee, a small snack or toiletries.

“Really small payments,” Andrews said. “None of them would be over $5.”

And once, like many college students, Andrews discovered that a debit payment had exceeded her balance. Although her shortfall was only about $3, her penalty for the overdraft was a $30 charge.

Andrews asked her bank for overdraft protection, which would transfer future overdrafts to a credit card while still charging a $10 fee.

“It goes onto your credit card,” Andrews said. “So you’re paying interest on it and you’re paying the $10 upfront for them to cover the cost.”

But the headaches caused by overdraft fees that University students often face may come to a end.

Last week, the Federal Reserve, under the direction of chairman Ben Bernanke, issued a restriction on overdraft fees triggered by ATM and debit card purchases, effective July 1, 2010.

However, this means if you make a debit purchase with insufficient fees, the transaction will be canceled.

Consumers hoping to avoid this must grant permission to their banks to offer them overdraft protection. The next time they overdraft, the transaction will go through and the bank will then be allowed to charge fees.

The ban will not affect fees on bounced checks or recurring debit transactions typically made to pay rent and utility bills.

The Center for Responsible Lending, a non-profit organization, applauded the ban but said the federal government should do more to limit overdraft fees.

“What they did is good, but it is hardly sufficient,” said Kathleen Day, a spokeswoman for the group. “And, in fact, in some ways by doing that and not taking any other actions, it in essence legitimizes an abusive product.”

U.S. Senator Christopher Dodd and U.S. Rep. Carolyn Maloney, both Democrats, have introduced bills in their respective legislative bodies calling for an end on automatic overdraft protection which consumers must pay for.

The Dodd bill, which has been endorsed by the CRL, would also limit the number of overdraft fees a bank can charge per year to six, and prohibit the amount a bank charges from exceeding the overdraft shortfall.

“I think people want their bank to cover them if they go over a certain amount,” Andrews said. “But I think people should be charged the amount they go over and nothing more.”

According to the CRL, in 2008, 50 million Americans faced overdraft fees which amounted to $24 billion. This total was a 35 percent increase in overdraft fee totals from just two years earlier.

The increase reflects a major rise in the use of debit cards over the last several years.

The average overdraft was caused by someone spending $17 more than they had in their account. The average overdraft fee was twice that amount – $34.

“This is a big problem for college students, who really live on debit cards,” Day said.

She said she believed overdrafts should be considered a form of lending.

“Why does the Fed even allow banks to call this a fee when really it’s an interest rate?” Day said. “An overdraft is really a short-term loan.”