HUNTSVILLE, Ala. (WHNT) — Congress has overturned a rule meant to protect consumers from excessive overdraft fees, and the change in law is awaiting the President’s signature.
The rule, established by the Consumer Financial Protection Bureau (CFBP), targeted large banks and credit unions, capping how much they could charge someone who overdrew their account. The U.S. Public Interest Research Group (U.S. PIRG) is warning the change could have the biggest impact on people living paycheck to paycheck.
“Now, large banks and credit unions have a blank check to keep raking in billions of dollars from people who can least afford it,” said U.S. PIRG Consumer Campaign Director Mike Litt.
The rule only applied to banks and credit unions with at least $10 billion in assets. They were given several options to penalize a customer for overdrawing their account: charging a flat $5 fee or charging a fee that cover the cost of the overdraft. Banks and credit unions could also still charge a fee that would generate profit, but overdrafts had to be treated like credit. The fee would be disclosed to consumers on the front end, and banks and credit unions had to abide by existing credit laws.
“Without the rule, banks can keep charging $35 per overdraft fee several times in a single day,” Litt said. “That adds up fast.”
Litt told News 19 he has a few suggestions to help manage overdraft fees.
“You can check to see if you are enrolled in overdraft coverage,” Litt said. “You can always opt back out in the future. Your debit card might be declined if your account doesn’t have enough money in it, but at least you won’t get hit with that fee. You can also sign up for low account alerts to get a text or an email when your balance falls below a certain amount.”
If you believe you have been wrongly charged an overdraft fee, Litt said you can file a complaint online with the CFPB.
U.S. PIRG is a nonprofit consumer advocacy group. Litt said the organization wants people to have a voice in decisions that impact their health, wellness and safety.
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