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With Pressure From Congress, Big Banks Move to Curb Overdraft Fees

For months, Congress has had its eyes on reining in the overdraft fees tacked on by many banks when consumers -- often unbeknownest to them -- exceed their

Jul 31, 2020
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For months, Congress has had its eyes on reining in the overdraft feestacked on by many banks when consumers — often unbeknownest to them — exceed their balances with debit card purchases. Rep. Carolyn Maloney (D-N.Y.) introduced a consumer protection bill earlier in the year, and Sen. Chris Dodd (D-Conn.) has vowedto follow suit later this fall.
Yesterday, that threat paid dividends, as two of the nation’s largest banks — Bank of Americaand JP Morgan Chase— announced plans to revamp their debit card policies voluntarily to add some of the consumer protections being pushed by the lawmakers. From The New York Times:
Bank of America said it would allow current customers to turn off the ability to spend when their account hits zero, starting Oct. 19. Next June, the bank plans to limit the number of times each year that current customers can overdraw their accounts when using a debit card at a store. It will let new customers choose whether they want overdraft protection when they are opening their account.
Chase would eliminate another controversial practice by which the banks reorder a customer’s debit purchases according to amount, rather than chronology — a scheme that creates more overdraft fees, which currently average upwards of $30 a pop.
The moves are not insignificant. Overdraft fees, which have grown steadily in recent years, are estimated to bring in more than $38 billion to the banks in this year alone, according to Moebs Services, an Illinois-based financial research firm.
Still, you can bet that Democrats will want to mandate the consumer protections, rather than leaving them to the discretion of the banks to install.
Camilo Wood

Camilo Wood

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Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing. Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers. Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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