GREENSBORO, N.C. — Could bank overdraft protection fees drop to $3? The Consumer Financial Protection Bureau is pushing for a decreased fee, either $3, $5, $7, or $14, which is all much cheaper than the average fee of $35.
“These banks make a lot of money from these overdraft fees, which has propped up their stock price, so it could end up being a big battle between the administration and the banking industry. It's something that every one of us as consumers should keep an eye on,” said Ja’Net Adams, founder of Debt Sucks University.
According to the CFPB, 23 million households pay overdraft fees in any given year. The new proposal could save consumers collectively $3.5 Billion or more in fees a year, translating to about $150 per household.
Overdraft protection is a convenience of sorts. The way it works is if you’re buying groceries using your bank debit card and the purchase goes through, even though you don’t have money, you’re charged a fee.
If you don’t have overdraft protection, your card is denied at the register because you don't have enough money.
The former scenario is more convenient at the moment, but if you're not looking at your bank account constantly, you're going to pay for it.
“You've gone to three or four other places and now you're at $150 of overdraft fees the embarrassment is worth it to be able to keep from those overdraft fees,” said Adams.
The CFPB is taking comments on the proposal up until April 1, 2024. If the proposal is approved at any amount, the changes should go into effect by October 1, 2025.