Precinct Reporter Group News

Top Menu

  • Precinct Reporter News
  • Food
  • Subscribe
  • Privacy Policy

Main Menu

  • Home
  • About
  • Contact Us
  • Read Our E-Edition
  • ADVERTISE
  • Subscribe
Sign in / Join

Login

Welcome! Login in to your account
Lost your password?

Lost Password

Back to login
  • Precinct Reporter News
  • Food
  • Subscribe
  • Privacy Policy

logo

Precinct Reporter Group News

  • Home
  • About
  • Contact Us
  • Read Our E-Edition
  • ADVERTISE
  • Subscribe
  • Financial Aid: Free Student Cash is Available

  • Free Teen Academy Leads to Good City Jobs

  • Need 4 Bridges Helps Kids Identify with Success

  • Black Business Month: A Pathway for Black Wealth

  • Inflation Reduction Act: Congress Passes Historic Bill

Latest PRGNews
Home›Latest PRGNews›Bill Seeks to Free Bank Consumers From High Costs

Bill Seeks to Free Bank Consumers From High Costs

By Precinct Reporter News
July 28, 2022
266
0
Share:

By Charlene Crowell

Runaway prices for food, fuel and housing make most consumers anxious about whether they will have enough money for a given month. Even after adjusting spending to stretch dear dollars are far as possible, a lot of people remain perplexed about what else can be done to hold on in these hard times.

Customers with bank and credit union accounts need to pay close attention to their monthly statements to identify multiple charges for overdraft fees.

Marketed and sold as a ‘customer convenience,’ overdraft fees are charged every time the cost of a transaction is more than a checking account balance. Averaging $35 per usage, banks are bloating their profits – most often by exploiting the short-term cash needs of consumers who are usually just a few days away from their next deposit.

In return, banks and credit unions across the country rake in $15 billion each year from cash-strapped customers with an average account balance of $350 or less. More monetary misery is added by some banks’ manipulative practices designed to maximize fees through delaying posting of account deposits, and/or reordering transaction .

It should be noted that some banks have voluntarily chosen to change or end their overdraft programs. Consumer advocates applaud lenders who have taken steps to reduce these costly fees.

Yet there is no legal requirement for other institutions to do so. Some lenders continue to charge three or more overdraft fees of $34 or more per day, often costing consumers more than $100 in a single day. A typical debit card overdraft fee, the most common overdraft source, comes from a transaction of less than $24, repaid within three days. Put in lending terms, a $34 overdraft fee for a $24 loan of three days is the equivalent of 17,000% APR.

As one consumer told the Consumer Financial Protection Bureau (CFPB), “$35 is a lot of money for a person that doesn’t have any.”

There’s nothing inherently wrong about a financial institution earning a fair profit. But there is nothing fair when billion-dollar institutions design products to prey upon people with the fewest financial resources – just to boost their bottom lines.

“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” said CFPB Director Rohit Chopra.

Other CFPB research  has found that consumers who are charged more than 10 overdraft fees a year account for 75 percent of overdraft fees each year.

If you’re thinking ‘there ought to be a law’, New York Congresswoman Carolyn Maloney agrees.

More than a year ago, she proposed the Overdraft Protection Act and was joined by 30 co-sponsors. Since that time, the number of co-sponsors has doubled to 60 and now include House colleagues representing 25 states including: California, Illinois, Maryland, Massachusetts, Michigan, New York, and Texas. Companion legislation is also in the U.S. Senate.

The Overdraft Protection Act (H.R. 4277) would amend the Truth in Lending Act to strengthen fair and transparent bank practices. Among its provisions the bill would require “reasonable and proportional” fees in relation to the amount of the overdraft, expand prompt and detailed customer notifications and/or statements, and provide customers the opportunity to cancel a transaction before incurring a fee.

For example, currently it is legal for banks to change the order of transactions, so they can debit accounts from largest to smallest to increase the number of overdraft fees triggered. As the banks maximize their overdraft revenues, consumers are drained of the dollars that can keep their households’ finances in the black. Rep. Maloney’s bill would ban such practices.

Other research and advocacy bolsters Rep. Maloney’s legislative goal. Congressional testimony from the Center for Responsible Lending (CRL) highlighted how consumers of color are harmed the most by ill-conceived institutional practices.

“By causing account closures and eroding trust in financial institutions, bank overdraft practices fuel financial exclusion,” wrote CRL. “Banks that are pledging millions or billions of dollars in investment in underserved communities while continuing to rake in hundreds of millions, or billions, of dollars annually in overdraft fees, are stripping wealth from the same communities they are claiming to support… Congress must hold these regulators accountable while itself ensuring that all checking accounts are free from destructive overdraft practices.”

As part of a July 12 news conference convened by Rep. Maloney, Nadine Chabrier, a CRL Senior Policy Counsel, underscored the organization’s legislative support.

“Legislation from Congresswoman Maloney and from Senators Booker and Warren would provide consumers with much-needed relief by reining in the cost and frequency of overdraft fees,” noted Chabrier. “Congress should pass these bills.”

Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.

Tagsbank feescenter for responsible lendingconsumer protectionlendingLong Beach Leaderoverdraft feesprecinct reportertricounty bulletin
Previous Article

S.B. Police Rob Adams Shooting Controversy

Next Article

Pandemic Has Lowered Life Expectancy of Black ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Precinct Reporter News

Related articles More from author

  • Latest PRGNews

    Bill Cosby Sentenced to 3 to 10 Years in Prison, Files Notice of Appeal

    September 25, 2018
    By Precinct Reporter News
  • Latest PRGNews

    Youth Action Project Paid Training for Youth

    March 3, 2022
    By Precinct Reporter News
  • Latest PRGNews

    Community Foundation Funding Cycle Seeks Nonprofits

    June 20, 2019
    By Precinct Reporter News
  • Latest PRGNews

    FILM REVIEW: Amazing Grace

    November 26, 2018
    By Precinct Reporter News
  • Latest PRGNews

    Housing Discrimination Complaints Reach 24-Year High

    November 21, 2019
    By Precinct Reporter News
  • Latest PRGNews

    NBA Great Kobe Bryant 1978-2020

    January 28, 2020
    By Precinct Reporter News

Leave a reply Cancel reply

You might be interested

  • Latest PRGNews

    Officials Urge Black Community to Take COVID Shot

  • Latest PRGNews

    Bill Cosby Sentenced to 3 to 10 Years in Prison, Files Notice of Appeal

  • Latest PRGNews

    Free Ballgame and Healthy Choices

Ads

Advertise with us!

Ads ||

Find us on Facebook

Ads

Precinct Reporter News Group

Your local news resource for 50 years in the Inland Empire, Orange County, Long Beach and surrounding areas!

To subscribe or advertise, call 909.889.0597

About us

  • Broadcasting & Media Production Company
    357 W. 2nd Street
    San Bernardino, California, CA 92401
  • mailto:sales@precinctreporter.com
  • Recent

  • Popular

  • Financial Aid: Free Student Cash is Available

    By Precinct Reporter News
    August 18, 2022
  • Free Teen Academy Leads to Good City Jobs

    By Precinct Reporter News
    August 18, 2022
  • Need 4 Bridges Helps Kids Identify with Success

    By Precinct Reporter News
    August 18, 2022
  • IE/OC Prostate and Breast Cancer, Change the Menu

    By PRGNews
    July 16, 2015
  • Join our Recipe Competition!

    By PRGNews
    July 16, 2015
  • SB Budget Cuts CDBG

    SB CDBG Cuts Have Local Nonprofits Braced for the Worst

    By PRGNews
    July 16, 2015

Follow us

© Powered by Hotspotwebsites.net. All rights reserved.