Consumer finance watchdog caps bank overdraft fees
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Big banks will now have to put a limit of $5 on overdraft fees, the Consumer Financial Protection Bureau said.
The consumer finance watchdog’s new rule could save customers $5 billion annually, and was part of the campaign against junk fees by the Biden administration.
“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,” Rohit Chopra, the agency’s director, said in a statement.
Banks and credit unions can charge overdraft fees, but must cap them at $5 or charge depositors a fee that covers the bank’s expenses and losses, the statement said.
The new rule applies to banks and credit unions that have at least $10 billion in assets. Previously, customers were charged $35 on an average, when they overdrew their bank accounts.
“For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts,” Chopra said.
The new rule is, however, reportedly opposed by the industry and the Republicans.