Bank of America can lift at least $140 in fees off a customer in one day if he or she doesn't have enough money in the bank.
That is the high cost of over-drafting a checking account at a cost of $35 per bounced charge. BofA caps at four the number of overdraft fees it charges in a day. Think that's bad? BB&T a regional bank in the Southeast, charges up to eight overdraft fees in one day for a total of $280 in fees. Let that overdraft roll over into a second day or more and the financial wreckage is considerable after additional charges and fees stack up.
The Consumer Financial Protection Bureau is vowing to do something about it. This week the agency announced it is launching an inquiry into banks' practices for overdraft fees and is seeking public comment on a special disclosure box it has proposed to include in monthly bank statements to ensure that customers clearly understand the terms of their bank's overdraft policy.
Nearly 85 percent of overdraft fees are incurred by only nine percent of banking customers, and net billions of dollars in revenue for banks each year. Those who are repeat over-drafters tend to be younger and have less money than the average customer, say consumer advocates.
Is this is one more way to tax the poor for not having enough money?
What are your bank's fees? Take a look at this survey from Consumer Federation of America to see how your bank stacks up. If you have been unfairly hit with multiple overdraft charges, share your story with firstname.lastname@example.org.
"Overdraft practices have the capacity to inflict serious economic harm on the people who can least afford it," said Richard Cordray, the director of the CFPB, in prepared remarks. "We want to learn how consumers are affected and how well they are able to anticipate and avoid paying penalty fees."
Some of the biggest banks have already made settlements in class action lawsuits that charged that the banks purposefully manipulated customer transactions in order to maximize overdraft fees. But so far settlements from Bank of America and JPMorgan Chase have amounted to little more than wrist slaps.
Pressure from consumer groups to change overdraft policies could backfire. Bank experts say that removing or changing a fee in one place means a new or higher one somewhere else, like increasing A.T.M. charges or maintenance fees.
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