Overdraft Fee Cap of $14: Advocates Hail Consumer Relief

CFPB proposal would cap overdraft fees at $14

A coalition of consumer advocacy groups is cheering a new federal rule that would cap overdraft fees on checking accounts at $14 per instance.

The groups are responding to a proposal by the Consumer Financial Protection Bureau (CFPB) that would lower the maximum allowable charge for a bank overdraft from $35 to $14.

In a statement, the groups noted that the current standard charge of $35 per overdraft far exceeds the actual cost to banks of managing the process of collecting funds owed.

“Banks should not be allowed to harm families by hiding their costs in back-end junk fees,” said Carla Sanchez-Adams, senior attorney at the National Consumer Law Center. “We strongly support the proposed rule, which will provide consumers with needed financial relief and help to restore trust in big banks.”

The advocates noted that the proposal requires banks to provide options to consumers and also offers banks flexibility in how they meet the requirements of the new rule and the range of products they may offer that include overdraft protections.

"The proposal promotes honest and affordable overdraft protection," said Mike Litt, U.S. PIRG’s consumer campaign director. "If big banks want to offer overdraft credit through debit cards and charge more than their costs, they would have to comply with the same protections required of credit cards."

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