{"id":21271,"date":"2022-01-05T13:17:35","date_gmt":"2022-01-05T13:17:35","guid":{"rendered":"https:\/\/nclnet.org\/?p=21271"},"modified":"2022-01-11T23:27:36","modified_gmt":"2022-01-11T23:27:36","slug":"capital-one-eliminates-predatory-overdraft-charges","status":"publish","type":"post","link":"https:\/\/nclnet.org\/overdraft_fees\/","title":{"rendered":"Capital One eliminates predatory overdraft charges"},"content":{"rendered":"

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By Sally Greenberg, NCL Executive Director<\/strong><\/p>\n

Low- and middle-income consumers suffer serious economic harm when they are forced to pay predatory overdraft fees. These fees are triggered when consumers charge more to their bank account \u2014 either on a debit card or by writing a check \u2014 than the funds existing to cover the charge. These can mean that a $5 charge \u2014when there isn\u2019t enough money in the account to cover it \u2014 costs a consumer more like $40 due to an overdraft fee of $35. And if the customer makes other charges not covered by the balance, each one of them can add a $35 overdraft fee.<\/p>\n

Some good news, though, came recently from the CEO of Capital One, Rich Fairbanks. He announced that the company will stop charging these harsh fees and return \u201csimplicity and humanity\u201d to banking.<\/p>\n

It used to be that covering an overage was a courtesy extended to bank customers at no cost. Sadly, that changed during the 1990s and 2000s, when overdraft fees became a profit center. And the profits are kind of shocking: $15.5 billion in 2019 for banks and credit unions on overdraft fees alone, according to the Consumer Financial Protection Bureau. For some financial institutions, these fees represent more than half of their profits. Reforms are badly needed.<\/p>\n

A recent Washington Post<\/em> editorial<\/a> identified overdraft best practices:<\/p>\n