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Monday, January 24, 2022

The CFPB says it will take a close look at banks that rely heavily on overdraft fees.

Customers who have already opted for the Capital One overdraft program will be automatically upgraded to the free version early next year, eliminating the $ 35 fee entirely. The bank said fixing them would cost it roughly $ 150 million in annual revenue.

While Capital One is not among the nation’s largest banks – JPMorgan Chase, Wells Fargo and Bank of America generated 44 percent of the fees recorded in 2019 by banks with over $ 1 billion in assets, according to the Consumer Bureau – that’s enough for the Decision to Have What -this value, say the defenders.

“This move by Capital One will have tremendous benefits for the most vulnerable consumers,” said Lauren Saunders, deputy director of the National Consumer Advocacy Center. It also “puts pressure on the rest of the banking sector to abolish these predatory fees, which are a secondary way of harming consumers.”

Rules introduced in 2010 helped curb some of the most serious abuses by requiring banks to obtain consumer consent to use overdrafts for debit transactions and ATM withdrawals, but the practice is still worth billions. Overdraft and related revenues in banks with assets of $ 1 billion or more increased by about 1.7 percent annually to $ 11.97 billion, according to the bureau’s latest report, from 2015 to 2019. But in 2020, it fell by more than a quarter to $ 8.84 billion, at least in part due to government aid programs in response to the pandemic.

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In recent years, the Bureau has already taken action against some banks. In August, he ordered TD Bank to pay $ 122 million in fines and damages to customers. In 2018, TCF National Bank, whose former head called his boat an overdraft, reached a $ 30 million settlement.

Capital One clients who do not yet have overdraft protection will be able to enroll in the program without fees, but regular overdrafts may not qualify. In a memo to staff, Richard Fairbank, the bank’s chief executive officer, said clients would need to demonstrate a stable deposit structure in order to qualify for overdraft protection, and there could not be frequent overdrafts in the past.

If the balance of the participant’s overdraft is not repaid in 56 days, the bank will write off it – the same procedure as now, according to the press secretary. The missed payment will not affect the traditional credit rating of the consumer, but it will be reported to the specialized bureau Early Warning Services, owned by the seven largest banks.

The Bank will continue to allow customers to subscribe to automatic free transfers from their Capital One savings accounts or money market accounts to pay for transactions that their current account does not cover.

World Nation News Deskhttps://www.worldnationnews.com
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