Americans Spent a Lot of Money on Overdraft Fees in 2016
Americans paid a staggering $ 15 billion in overdraft and bounced check fees in 2016, according to data released by the Consumer Financial Protection Bureau.
The CFPB was able to track the fees — which are incurred when consumers attempt to make purchases without enough funds in their account to cover the transaction — because banks with assets over $ 1 billion are required to report them, the CFPB said, according to CNN Money. In 2016, those banks reported $ 11.41 billion in fees, a 2.2% increase from 2015, the first year banks began reporting overdraft and bounced check fees to the federal agency.
The CFPB came up with the total $ 15 billion number by estimating the remaining charges handed out by smaller banks and credit unions.
The fees, which come out to $ 34 to $ 36 for a number of major bank chains such as Bank of America, Chase, and PNC, can be particularly harmful to Americans on teetering on the brink of poverty.
“Consumers living on the edge can find themselves racking up numerous overdraft charges,” CFPB Director Richard Cordray said on a press call, CNN reports. “Despite recent regulatory and industry changes, consumers with low account balances and little margin for error continue to pay significant overdraft fees.”
While a 2010 mandate by the Federal Reserve requires that banks receive a customer’s permission to approve a transaction when there are insufficient funds, many customers opt to proceed anyway, triggering the overdraft penalty. And more than half of consumers aren’t aware that they consented to overdraft fees in the first place, according to 2014 study from the Pew Research Center.
To counter these issues, the CFBP announced Thursday that it is testing a new version of opt-in forms in order to improve clarity, CNN reports.
The form will “explain that the opt-in decision applies only to one-time debit card and ATM transactions and does not affect overdraft on checks and online bill payments,” Cordray said.
“They also are designed to make clear that debit card and ATM overdraft is entirely optional,” he added.
