Overdraft fees to be limited under new federal rule
The Consumer Financial Protection Bureau has passed a rule limiting overdraft fees banks can charge, continuing the Biden administration's crackdown on junk fees that affect consumers on everyday purchases. “For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans' deposit accounts,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in a statement. “The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they're charging on overdraft loans.” However, the Consumer Bankers Association warned the new rule may reduce the availability of overdraft services, describing them as a “critical safety net” for consumers. “The CFPB’s rule jeopardizes access to overdraft services when hardworking Americans face unexpected expenses, leaving them with worse alternatives like payday loans and pawnshops.” Overdraft fees disproportionately affect consumers with low savings, according to the CFPB, with around 70% of overdrafts charged to customers with account balances between $237 and $439.
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