Democratic State AGs Push Banks on Overdraft Fees
Earlier this month, attorneys general (AGs) from more than a dozen states sent letters urging JPMorgan Chase, Bank of America, Wells Fargo, and U.S. Bancorp to eliminate overdraft fees for consumers. In the past year, all four banks have announced changes to their overdraft policies that would likely reduce revenues from the charges, which they have been criticized for bringing in.
The AGs argued that the steps already taken are not enough, and wrote in their letters that “further action is needed to eliminate the crushing impacts of such fees on consumers and families,” according to American Banker.
They cited banks like Citigroup, Capital One Financial, and Ally Financial for already making moves to eliminate the fees, saying those are “vital steps toward creating a fairer and more inclusive consumer financial system.” They also argued that customers of color and low-income customers are disproportionately affected by overdrafts.
Though Bank of America did not respond to a request for comment in American Banker’s story, it stated in January that it was cutting overdraft fees from $35 to $10, and that it was eliminating customers’ ability to overdraw their accounts during ATM transactions.
However, JPMorgan Chase, Wells Fargo, and U.S. Bancorp have kept their overdraft fees at roughly $35 and have each published a series of actions to help customers avoid overdraft charges. JPMorgan Chase raised its overdraft cushion last year from $5 to $50, and announced that it will allow customers to access their direct deposit funds up to two days early.
U.S. Bancorp also plans to increase its overdraft cushion to $50 and to give its customers a 24-hour grace period to fix overdrafts by depositing funds. Additionally, Wells Fargo said it would eliminate fees for transfers that customers make to avoid overdrafts, give customers early access to direct deposit funds, and provide a 24-hour grace period similar to U.S. Bancorp.