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CRL Supports Legislation to Reform Bank Overdraft Fees

Tags » Checking Accounts, Debit Cards, Overdraft Fees  » Comments (3)

Congressional proposals to rein in abusive overdraft practices are long overdue, Center for Responsible Lending executive Eric Halperin told the House Financial Services Committee today (full testimony). Halperin, who is director of CRL's Washington office, gave full support to legislation aimed at reforming bank overdraft programs, which cost consumers $23.7 billion last year and are among the most predatory lending products on the market.

"Charging people a $35 fee for a small, debit card transaction is unacceptable," said Halperin, director of CRL's Washington office. "It doesn't save them bounced check fees, it simply skims money from their account and puts them in a bind."

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Overdraft fees can be reduced by banks paying checks from lowest to highest. For example, if an account has $1,300 and the checks presented that day are for $1,400, $500 and $600, a bank will pay the $1,400 check first so three overdraft charges can be charged. The bank could pay the $500 check first, followed by the $600 check and then the $1,400 check. Therefore, only one overdraft charge would be incurred by the consumer. Bank presidents are not going to voluntarily pay the checks to favor the consumer. Congress needs to regulate the order of how checks are paid. The technology is there to pay consumer checks in steps as opposed to the current method.


would someone explain to me the difference between writing a NSF check (which is illegal) and attempting to make payment for goods purchased (with insufficient funds in the account) with a debit card. Seems to me to price of paying an overdraft charge compared with facing prosecution is cheap! I don't know about others, but if I was charged an OD fee once I would quickly learn the benefit of balancing my checkbook and taking appropriate responsibility for my actions.

How about losing your job and then having your EDD checks on hold for 3 months because I claimed $80 of earnings? I tried to stop all my automatic withdrawals that I had set up with credit cards, car insurance, etc. But some of them take time to cancel and some of the companies made various attempts to get the funds. I now owe $231 in overdraft fees from just 1 month. I didn't write a check or use a debit card. None of the funds were even paid, but the mere attempt to collect the money caused a $33 overdraft charge per attempt from Chase Bank.

I also never signed up for that bank. I was banking with WaMu when this thug took over. I finally have the $231 cash and plan to pay it off and close my account. But they told me if there is any action on my account, it will automatically re-open it. It will not be officially closed until there is no action on it for 30 days. Yes, I believe we need legislation to help protect people from this type of exorbitant fee gouching.

BTW: There were several people in the bank trying to deal with these fees and get things paid off. I over heard them talking to other employees. What is going on?!

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