The House voted Wednesday to overturn a rule that would have limited bank overdraft fees to $5, following the Senate in moving to dismantle the regulation that the Biden administration had estimated would save consumers billions of dollars.
President Joe Biden had called the fees, which can be as high as $35, “exploitative,” while the banking industry has lobbied extensively to keep the existing fee structures in place.
The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
Some banks that charged multiple nonsufficient funds fees on a single item plan to refund the fees to consumers, and most of these institutions supervised by the Consumer Financial Protection Bureau have decided to eliminate nonsufficient funds fees altogether, the CFPB said in a statement yesterday.
Following President Joe Biden’s reference in the State of the Union address to reducing bank overdraft and credit card late fees, industry trade groups said the president had provided “misleading” information about the fees.
The Biden administration’s push to crack down on so-called junk fees that banks and other companies charge their customers is being met with withering criticism from banking groups.
Bank of America says the revenue it gets from overdrafts has dropped 90 percent from a year ago, after the bank reduced overdraft fees to $10 from $35 and eliminated fees for bounced checks.
Citizens Bank plans to eliminate nonsufficient funds fees by the end of the year, a move being made as more banks continue to take steps to address the effects banking fees have on consumers.
As more national and local banks continue to reduce or eliminate fees for overdraft and nonsufficient funds, Boston-based Eastern Bank will also make changes to these fees later this year.
Cape Cod 5 plans to eliminate all fees for consumer and business overdrafts, as well as nonsufficient funds, in a move that matches or goes beyond the steps several national banks have taken to address the effects these fees have on consumers.
Buffalo-based M&T Bank has joined the growing list of banks reducing or eliminating customer fees for overdrafts and non-sufficient funds.
Citing billions of dollars that households spend annually on “exploitative junk fees,” the Consumer Financial Protection Bureau launched an initiative Wednesday to reduce the fees charged by banks, credit unions and other financial companies.
Bank of America is slashing the amount it charges customers when they spend more than they have in their accounts and plans to eliminate entirely its fees for bounced checks.
Banks earned an estimated $15 billion from overdraft fees in 2019, and smaller institutions brought in almost as much income per account as large banks, according to research from the Consumer Financial Protection Bureau.
Santander Bank has launched a new feature that the bank said would eliminate fees for nearly one-third of customers who overdraw their accounts.
Initiatives by banks to give customers access to the federal government’s economic impact payments have caused confusion for some customers with overdrawn accounts, according to the Consumer Financial Protection Bureau’s latest consumer complaint bulletin.
PNC Financial Services Group Inc. has created a new digital tool to help customers avoid overdraft fees, with a pilot program showing that the tool helped reduce these fees by more than 60 percent.
TD Bank will pay almost $100 million to more than 1.4 million customers as part of a settlement for violating several federal regulations with its overdraft protection services.
Digital Federal Credit Union has settled a class action lawsuit that alleged the $8.5 billion asset credit union unjustly charged overdraft fees under a policy that was unclear.
Overdraft fees at American financial institutions declined in the first quarter of the year, suggesting that overdraft prices are no longer inelastic, according to data recently published by the Illinois economic research firm Moebs Services.
