U.S. Senators Cory Booker (D-NJ) and Elizabeth Warren (D-MA) today reintroduced legislation to crack down on exploitative overdraft fees that banks charge consumers when they make a purchase or pay a bill but don’t have sufficient funds in their account.
The Stop Overdraft Profiteering Act of 2021 would ban overdraft fees on debit card transactions and ATM withdrawals, and limit fees placed for checks and recurring payments. It would also mandate that banks post transactions in a manner that minimizes overdraft and nonsufficient fund fees (often times, banks reorder transactions in such a way as to maximize overdraft fees, which can mean, in some cases, that the consumer faces multiple charges).
“Exploitative and excessive overdraft fees allow banks to reap enormous profits at the expense of the most economically vulnerable people,” said Sen Booker. “Even when accounting for the temporary and uneven measures that the industry took to provide relief to consumers throughout the pandemic, banks continued to make billions of dollars of revenue last year on the backs of their most vulnerable consumers. Our bill will require banks to institute overdraft protections and transparency measures that protect consumers and put an end to the unfair practices that can often be the tipping point toward financial ruin for struggling families. Families emerging from this crisis cannot continued to be saddled by these burdensome and abusive practices.”
“While the COVID-19 pandemic has swept across the country and millions of families have struggled financially, big banks have reaped in billions of profits made from overdraft fees,” said Senator Warren. I am glad to introduce this critical legislation with Senator Booker to protect consumers and crackdown on these predatory practices.”
Specifically the Stop Overdraft Profiteering Act of 2021 would:
Prohibit overdraft fees on debit card transactions and ATM withdrawals.
Prohibit financial institutions from charging more than one overdraft fee per month and no more than six overdraft fees in any single calendar year for check and recurring bill payment overdrafts.
Limit check and recurring bill payment overdrafts fees and non-sufficient fund fees to an amount that is reasonable and proportional to the financial institution’s costs in providing the overdraft coverage.
Mandate a three-day waiting period between when an individual opens a new account and when a financial institution may offer overdraft protection.
Mandate that depository institutions post transactions in a manner that minimizes overdraft and nonsufficient fund fees.
Increase other consumer disclosures related to overdraft coverage programs.
In 2018, Booker and Warren sent a letter, signed by 13 other Senators, to the Consumer Financial Protection Bureau questioning its plan to no longer pursue regulatory action on overdraft fees, after it failed to mention action in its most recent regulatory agenda filing, even though it had been on the Bureau’s agenda for four years.
Last year, at the start of the COVID-19 pandemic, Booker filed legislation that would ban exploitative bank overdraft fees for the duration of the Coronavirus public health emergency. One month later, Booker sent a letter to more than a dozen bank CEOs urging them to temporarily ban charging customers burdensome bank overdraft fees during the coronavirus emergency.
Those dirty liberals! Trying to keep the poor bankers from making an extra buck.
My roommate always leaves all the windows wide open at night. He says he likes to sleep with a draft, as it keeps him cool at night. However, the massive amounts of cold drafts pouring through the windows became too much for me to bear, so I started charging him overdraft fees, which prompted him to take me to court. He managed to get the overdraft fees eliminated. However, when he failed to pay his court fees on time, the court started charging him interest fees, which kept increasing every month that the fees were left unpaid. So he decided to take the court to court and managed to get the court fees eliminated, but now the latter court started charging him court fees with interest.
It’s an endless, vicious cycle, and he will have to deal with it.
Anyway, as far as the overdrafts are concerned, I hired a brick mason to remove all the windows in the room and to replace them with brick and cement.
I also hired an electrician to remove all the outlets in the room, so that my roommate would not be able to use drafty air conditioner units in the room.
Problem is, now we are all sweating buckets at night, and I yearn for those days of yore when those huge overdrafts kept us cool and cozy.
To avoid some bank fees and get slightly higher saving interest: in my office once a month I swipe every debit card I have for $1.00 5 times each.
All ATM and debit card transactions are processed immediately through the Federal Reserve. The Federal Reserve gathers these transactions every four hours. If your bank catches the 4 hour window within the last few minutes (seconds) of the electronic transaction the it will be processed at the 4 hour mark in those minutes and seconds. This is automatic. The longest it should take is 4 hours.
Having said that, the banks have the option of when to send transactions to the FedWire system (ACH) so they can order them in a way to their advantage to maximize overdraft fees. Many banks have over-draft protection so that they process your transactions in an order which will not create over-draft fees. You have to ask for it or in many cases can enable it on your account on your account page on the bank’s website.
You can always call your bank regarding the over-draft fee and in most cases they will credit it back to you.
?. Why not just make sure there’s enough in the account before writing out any check to begin with thus avoiding overdraft fees? If a minimum amount is required to avoid monthly maintenance fees, see to it that the minimum amt. required is in the account and never falls below the required threshold. This is doable.