A bill that would limit banks' ability to charge overdraft fees is gaining ground in the House.
Some banks have voluntarily stopped charging for overdraft, including Citi, Ally bank and Capital One. That halt was partly a response to pressure during the COVID crisis, and a result of increased competition from financial technology companies.Sponsored by Rep. Carolyn Maloney in the House, the bill would permit only one overdraft charge a month, and no more than six a year. After that banks could either let you continue to overdraft, without a charge, or cut you off.
The bill also says fees should be reasonable and proportional — for example, no more $35 fees for buying a $3 cup of coffee. Though advocates are hopeful the bill makes it out of committee to a House vote, its chances in the Senate are seen as limited.Post financial-crisis regulation addressed this issue by requiring customers to "opt-in" to overdraft protection, but didn't limit how much banks could charge."We don't think the legislation is necessary," said Bill Hulse, vice president for Capital Markets Competitiveness at the Chamber of Commerce.
Consumers benefit from overdraft protection, and the bill would harm banks' ability to offer it, he said.with the CFPB, bank customers complain about onerous fees, often for accidentally overdrawing their account — forgetting an autopay feature is turned on, or not moving funds between accounts.s. "How does that not seem insane?"
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