Banks to Earn over $4 Billion in Overdraft Fees
The big 3 banks, Wells Fargo, Bank of America and JP Morgan Chase are set to earn over $4.5 Billion in overdraft fees this year according to WYFF4 News. That is billions in fees charged sometimes without the consumers knowledge and consent.
As we all know, overdraft fees are charged whenever a check written on the account or an automatic payment is debited at a time when the account does not have sufficient funds. These fees can add up. Banks can get creative in the allocation of fees by for example debiting the lowest item first followed by a higher amount creating an overdraft even though both transactions were applied on the same day. That is frowned up by regulators and has resulted in investigations for some banks. Nonetheless, it is possible for banks to charge multiple overdraft fees on the same day.
Overdraft fees can also result from atm withdraws done when the account does not have sufficient funds. Now, banks are supposed to give each consumer the option to take the money and incur an overdraft fee or have the transaction declined. Nearly half of all consumers charged with an overdraft fee after an atm withdrawal allege that they do not recall authorizing the bank to given the funds and incur the fee. I guess we all ought to read all that fine print now and then.
I know this all too well. I once made a deposit in cash and the clerk made an error resulting int he funds being held for several days. I was in total shock when I was hit with nearly $300 in overdraft fees as every monthly bill hit my account and the bank was more than happy to charge me over and over again. Thankfully, it was their mistake that time, but it was still an insane amount in fees!
As a bankruptcy lawyer, some of my clients are not so luck and have hundreds of dollars in overdraft fees being reported in their credit reports which prevents them from opening bank accounts. If you do not have a bank account, you cannot complete most transactions without incurring additional fees. These fees range from check cashing fees which is insane that we force working families to pay to access their own money. Another option that is become increasingly popular are these debit cards, but they too come at cost.
The Consumer Financial Protection Bureau is looking into the overdraft fees among other bank fees and rightly so. $4.5 billions taken from struggling families to fatten up the pockets of big banks is wrong and should stop right away. Now, there has to be personal responsibility with folks making sure there is money in their accounts before writing checks. But the banks cannot take advantage of folks by over charging or paying transactions in a way that increase the fees charged to working families. Hopefully, the CFPB’s involvement will lead to better regulations and protections for families around the country. CFPB wants to hear from folks who have being victimized by overdraft fees and other financial irregularities. Go to their website for more information.