Stop Gotcha Bank Fees
Stop Gotcha Bank Fees
Congress must stop banks and credit unions from driving up overdraft fees through unfair practices.Write your representative today.Unauthorized overdrafts cost Americans $17.5 billion per year, driving many unsuspecting consumers into the red and burdening low-income working people, young consumers and other vulnerable Americans with overwhelming fees. Gone are the days when an overdraft fee was a moderate disincentive to keep consumers from chronically overdrawing their accounts. Now some banks and credit unions are deceptively increasing the number of fees charged through manipulations like clearing the highest debits first, no matter the order in which the transactions were made. This serves to increase the number of $35 fees they can charge Dysfunctional overdraft practices are out of control, and are costing hardworking people big chunks of their hard-earned income. Congress will soon consider going further than the Fed and making real reforms to banking laws. Representative Carolyn Maloney (D-NY) and other members of Congress have recognized the need to stop banks and credit unions from taking advantage of people, many of whom are living paycheck-to-paycheck. Give them your support.
Dear [ Decision Maker ] , Write your letter here.
Sincerely, |
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| Background Information |
OVERDRAFT LOAN = HIGH-COST NO-CHOICE CREDIT
Protection? More like small loans with abusive terms.
Banks and credit unions now enroll many of their account holders into the most expensive option for covering overdrafts—an option customers generally don't want and didn't ask for—and leave them without the information they need to protect their funds. Under these systems, financial institutions routinely approve uncovered transactions without warning their customers of a deficit in their accounts, and charge an average $34 fee for each incident, even when the uncovered purchase amounts to just a few dollars.
Fees vastly outweigh shortfalls
Almost half of all overdrafts (46%) are triggered by debit cards at the ATM or the point of sale. These overdrafts could be easily prevented with a warning or denial. Most debit point-of-sale overdrafts are small, averaging less than half this $34 fee, meaning that these overdraft loans cost nearly $2 for every dollar advanced to cover the shortfall.
Unfair practices
Unfair practices include holding deposits longer than necessary and clearing daily transactions from the highest to the lowest, which often allows the bank to charge more fees than are warranted. Banks and credit unions are collecting $17.5 billion per year in abusive overdraft fees, higher even than the $15.8 billion extended in funds to cover the overdrafts.
As banks increasingly rely on this source of income, they are penalizing customers in new ways, like charging for each day an account stays in the red. The fees come disproportionately from low- and middle-income Americans.
Lenders avoid disclosing interest rates
Because of a loophole in federal regulations, banks do not have to disclose the annual interest rate of an overdraft loan to their customers. This means that customers are denied the ability to comparison shop based on the true cost of credit.
