CFPB issues study on bank and credit union overdraft practices

The Consumer Financial Protection Bureau has issued this study on bank and credit union overdraft practices. As explained in the agency's press release, the study

raises concerns about whether the overdraft costs on consumer
checking accounts can be anticipated and avoided. The report shows big
differences across financial institutions when it comes to overdraft
coverage on debit card transactions and ATM withdrawals, drawing into
question how banks sell this account feature. The report also finds that
consumers who opt in for overdraft coverage [as required by 2010 legislation meant to benefit consumers] end up with more costs and
more involuntary account closures. “Consumers need to be able to anticipate and avoid unnecessary fees
on their checking accounts. But we are concerned that overdraft programs
at some banks may be increasing consumer costs,” said CFPB Director
Richard Cordray. “What is often marketed as overdraft protection may
actually be putting consumers at greater risk of harm.”


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