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U.S. banks and credit union practices drive up overdrafts

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Take Action Today In response to media scrutiny and the threat of new legislation, several major banks announced changes to their overdraft practices recently, but they are too weak and may well disappear when the media spotlight is off. A Consumer Financial Protection Agency that will address unfair overdrafts and other financial abuses is in debate in Congress now. Sign a petition supporting CFPA.

Bailouts and credit crunches aside, our nation's banks and credit unions are excelling in one way at least – driving up the number of overdraft fees they charge their customers.

"Overdraft Explosion," a report we release today, finds that banks and credit unions collected nearly $24 billion in overdraft fees in 2008, a 35 percent increase in just two years.

Most banks now automatically approve debit card purchases when the funds aren't there, charging their customers an average $34 fee without giving them the chance to cancel. They use sophisticated software to maximize the number of fees they can charge in a day, re-ordering debits from largest to smallest and sometimes waiting longer than necessary to credit deposits to their customers' accounts.

Our report finds that unfair overdraft practices are affecting millions of Americans: over 50 million have an overdrawn checking account at least once in a 12-month period and 27 million have five or more overdraft or NSF fees in a year. Thousands have written to the Federal Reserve Board asking that banks at least be required to get their customers permission in writing before enrolling them in such an expensive system.

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 lenders.

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