Joe Biden Plans To Slash Bank Overdraft Fees To As Little As $3
www.huffpost.com
“Banks call it a service,” the president said. “I call it exploitation.”

“Banks call it a service,” the president said. “I call it exploitation.”

The Biden administration unveiled a new rule Wednesday aimed at slashing bank overdraft fees to as low as $3, a move the president said would help end abusive practices by financial institutions.

Under the proposal, banks could continue to charge fees when a customer’s account falls below zero, but either at a price in line with the bank’s actual costs to administer the overdraft or at an established benchmark created by the new rule.

The Consumer Financial Protection Bureau (CFPB) proposed potential fees of $3, $6, $7 or $14 and is seeking feedback from banks and the public on what would be appropriate. Current overdraft fees often push $30 or more, taking a significant bite out of low-income accounts.

  • Ekybio@lemmy.world
    811·
    10 months ago

    Biden: Wants to do something good for a lot of people

    GOP: “Thats communism and evil and unamerican and unchristian and racist and the West is falling! Quick, do something before he helps the poor!”

    • dhork@lemmy.worldEnglish
      394·
      10 months ago

      Democrats: “This one thing doesn’t go far enough at all! There is no way in good conscience I can support this man!”

      • katy ✨@lemmy.blahaj.zone
        101·
        10 months ago

        Twitter users: I have no idea how government works but Biden didnt do everything i wanted so im not voting

      • FuglyDuck@lemmy.worldEnglish
        145·
        10 months ago

        It doesn’t go far enough. Over draft fees happen on a checking account. Banks know exactly how much is available.

        Certain banks are also notorious for charging overdraft fees when there was literally no overdraft.

        • dhork@lemmy.worldEnglish
          101·
          10 months ago

          Certain banks are also notorious for charging overdraft fees when there was literally no overdraft.

          There’s an explanation for at least one way they do that. Certain transactions end up being “pre-authorized” for a larger amount before they settle. Gas stations are a common place for this: you swipe the card when you first get to the pump, then you pump, and then you pay the bill based on how much you pump. When the card is swiped, a “hold” gets put on your account for a large amount, perhaps $150, and then the charge goes through for the actual amount you paid.

          When you pay by credit card, this hold goes against your available credit, and since most people are nowhere near their limit this ends up not being that big a deal. However, when you pay by debit this hold “freezes” actual cash in your bank account, which then can’t be used for anything else and can cause you to overdraft while there is still money in your account. Tnis “freeze” may not actually be listed on your account anywhere. What’s even worse is that the hold can last for days, and you may not even realize it.

          • the post of tom joad
            102·
            10 months ago

            Allow an overdraft fee to exist, and banks will find ways to make them happen. Period. There’s no need for paragraphs of explanation for a concept so brutally simple, that furthermore has been proven.

            Hell, obama addressed their predatory practices in the consumer protection act (iirc the acts name).

    • givesomefucks@lemmy.worldEnglish
      821·
      10 months ago

      Biden: Wants to do something good for a lot of people

      It’s a bandaid on a massive headwound…

      Then sending you home while still concussed and bleeding everywhere.

      Sure the band aid is better than nothing, but if people are having multiple overdrafts a month, then their real problem isn’t how much an overdraft fee is.

      Say someone has 4 a month, that’s a lot, and I doubt many get that consistently.

      Going from $33 to $3 saves 120/month.

      It’s not nothing, but that person is still negative on their bank account. Probably carrying a shit ton of credit card debt. Speaking of, doing something about interest on predatory lending (including credit cards) would be much more effective, but hurt the rich and banks even more

      The main issue is a lot of people do to have enough to live.

      • Flying Squid@lemmy.world
        28·
        10 months ago

        This is a huge fucking problem and this will be a huge help. Don’t let the perfect be the enemy of the good.

        Households frequently incurring overdraft and NSF fees are more likely to struggle to meet their financial obligations: Among households that frequently incurred overdraft/NSF fees, 81% reported difficulty paying a bill at least once in the past year. This drops to 25% for households that were not charged a fee.

        Low-income households are hit the hardest Overdraft and NSF fees: While just 10% of households with over $175,000 in income were charged an overdraft or an NSF fee in the previous year, the share is three times higher (34%) among households making less than $65,000.

        https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-report-showing-many-americans-are-surprised-by-overdraft-fees/

        Helping poor people is always a good thing.

        • givesomefucks@lemmy.worldEnglish
          21·
          10 months ago

          And someone who won’t is better.

          I’m not denying that.

          But why would you pick someone to help you with zero medical knowledge just because he wont keep bashing?

          Why wouldn’t you want a doctor or even just a school nurse instead?