Bank overdraft fees cost Americans billions each year, according to the Consumer Financial Protection Bureau.
Topline
The Consumer Financial Protection Bureau is pushing to reduce the overdraft fees Americans are charged at banks and credit unions when they don’t have enough money in their accounts to cover spending, which could save customers $3.5 billion a year, the latest in a string of crackdowns on fees by the Biden Administration.Key Facts
Under a new proposed rule, large financial institutions could either charge a flat fee for overdraft payments that aligns with the service’s cost, or provide the same disclosures and protections for overdraft services that are required for credit cards and other loans.
If banks choose the flat fee option, that fee would be based on an established benchmark, the CFPB said, noting the agency still has to decide which benchmark—$3, $6, $7 or $14—it thinks is the appropriate amount.
The new rule would apply to institutions with more than $10 billion in assets—which includes some 175 banks and credit unions in the U.S, according to the CFPB.
The agency says the rule would close a loophole that has exempted overdraft loans from consumer protections required by the Truth in Lending Act.
