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Bureau May Change the Way Your Bank Charges Overdraft Fees

A 10-year old federal rule that limits banks’ ability to charge customers for overdraft fees is under investigation by the Consumer Financial Protection Bureau (CFPB). The rule prevents financial institutions from automatically enrolling you in their overdraft protection program without permission.

The Bureau plans to determine whether the rule should remain as is, be amended or completely “rescinded to minimize any significant economic impact,” once a final report is issued.

This plan is part of a larger by the CFPB, under a new initiative, to evaluate how existing regulations are affecting small business and entrepreneurs. Consumer advocates arguing for the rule said customers should “have their purchase declined rather than unwittingly incur a $35 overdraft fee for a $3 latte.”

The CFPB said in 2013, “a material decrease in the amount of overdraft fees paid by consumers.” CFPB finds that consumers participating in their bank’s overdraft protection are at risk for higher fees. These accounts are also closed at a rate 2.5 times higher than those who do not participate.

On average, customers pay $35 per account overdraft. As a result, the industry made more than $11.5 billion last year on overdraft fees.

Congressional Democrats are looking closely at the banking industry with many of the 2020 presidential candidates proposing new legislation to better regulate how banks and financial institutions are charging consumers.

Sen. Bernie Sanders (D-VT) introduced legislation with Rep. Alexandria Ocasio-Cortez (D-NY) that caps interest rates on credit card at 15%. Sen. Elizabeth Warren says her administration would seek to imprison corporate bankers for fleecing consumers. Sen. Cory Booker (D-NJ) introduced a bill in 2018 with Sen. Sherrod Brown (D-OH) to ban overdrafts on debit card use in most circumstances.

While these may not pass Congress before the next election, it appears this issue will be among the many campaign talking points voters will hear in the next 18 months. According to political analysts, these bills will have the best chance of passing if Democrats are able to hold the House and control the Senate come January 2021.

The Trump administration is overhauling the CFPB, the government’s watchdog bureau that in recent years has become more business-friendly by rolling back regulations, including those that prevent payday lenders from taking advantage of the poor and disenfranchised.

There’s no estimated date of completion for this CFPB investigation, but a public comment period is to be announced where the CFPB says consumers will have 45 days to submit their views, complaints or other statements on the issue.

We will keep you and your checkbook updated as news becomes available.

Do you think banks should have your permission to enroll you in an overdraft program? Tell us what you think! Leave a note in the comments. You can also contact us for more information! Feel free to shoot us an email to, find us on TwitterFacebookInstagramLinkedIn, or even connect with us directly on our website!

About the Author: Aisha K. Staggers is a writer, lecturer, political analyst and literary agent. She appears almost weekly for “Staggers State of Things” on the Dr. Vibe Show. Her work has been published by Paper Magazine, AfroPunk, The Spool, GREY Journal, MTV News, HuffPost, Blavity, Atlanta Blackstar, For Harriet, New York Review of Books and a host of other first-run publications and syndicated outlets. Find her on Twitter @AishaStaggers. For more of her work, check out her page here!

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