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 Wednesday.
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.
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.
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.
