As Vox explains, overdraft fees are one of the ways that banks have of separating you from your money.
Bank overdraft fees, which can average about $35, are often higher than the transactions that trigger them.
And they can be a cash cow: According to the CFPB [Consumer Finance Protection Bureau], bank revenue from overdraft and insufficient fund fees hit $15 billion in 2019.
People hit hardest by fees on checking accounts and other random bank fees are often already more at risk financially.
Black consumers pay double the bank fees white consumers do, and Hispanic consumers triple. Bank fees are often hardest to navigate for people with the least means, who can’t keep enough in their accounts to avoid maintenance fees or from time to time accidentally spend a little more than they have.
Biden, being Biden, is working to protect people!
On January 17, 2024, the CFPB proposed a rule to close the bank overdraft loophole. Speaking in support of the CFPB’s action, President Biden said:
For too long, some banks have charged exorbitant overdraft fees — sometimes $30 or more—that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines. Banks call it a service — I call it exploitation.
Today’s proposal would cut the average overdraft fee by more than half, saving the typical American family that pays these fees $150 a year. That would add up to save families $3.5 billion every year.
Is there still more work to be done? 100%! Lots more work. But Biden did more than many people guessed could be done. He deserves a lot of credit. AND he deserves to be re-elected.
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