The US Consumer Financial Protection Bureau (CFPB) has published a new report on bank and credit union overdraft practices that it says "raises concerns about whether the overdraft costs on consumer checking accounts can be anticipated and avoided."
The bureau found big differences across financial institutions when it comes to overdraft coverage on debit card transactions and ATM withdrawals, and said that drew into question how banks sell this account feature. The report also finds that consumers who opt in for overdraft coverage end up with more costs and more involuntary account closures.
Consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that overdraft programs at some banks may be increasing consumer costs,” said CFPB Director Richard Cordray.The report titled "CFPB Study of Overdraft Programs" is available here. A fact sheet about financial institution overdraft practices is also available from the CFPB.
“What is often marketed as overdraft protection may actually be putting consumers at greater risk of harm.”