SOURCE: Center for Responsible Lending


August 01, 2014 09:41 ET

Banks Fees Exceed Overdraft Amounts, CFPB Study Finds

WASHINGTON, DC--(Marketwired - August 01, 2014) - Yesterday, the Consumer Financial Protection Bureau released a report highlighting the need for robust reform on bank overdraft practices. In response Center for Responsible Lending president Mike Calhoun comments:

The CFPB release underscores the urgent need for reform on banks fees -- particularly the practice of tacking on fees on debit card transactions that could be denied at no cost.

A report by the Consumer Financial Protection Bureau found that overdraft fees on debit cards typically exceed the amount of the overdraft itself. The CFPB's examination found that the median debit card transaction that triggers an overdraft is $24 -- while the average charges are $34.

This finding is similar to CRL's analysis of checking account data in which the typical debit card transaction that triggered a fee was $23.

We also found that the average amount overdrawn was $20 meaning consumers paid $1.75 in fees for every $1 overdrawn.

Adding insult to injury, consumers get hit even harder when banks reorder transactions to trip consumers into paying higher fees and charge additional fees each day an account is overdrawn.

The CFPB needs to extend consumer protections across the industry. The CFPB should use its authority to ban or limit overdraft fees on debit card and ATM transactions and rein in excessive bank fees on all checking account transactions.

To discuss Mike Calhoun's comments or request an interview with a CRL spokesperson on overdraft, please contact Catherine An at or 202-349-1878.

About the Center for Responsible Lending: The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation's largest community development financial institutions.

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