WASHINGTON (8/1/14)--The Consumer Financial Protection Bureau said Thursday that it has studied the effect of a 2010 "opt-in" requirement that depository institutions obtain a consumer's consent before charging fees for allowing overdrafts on most ATM and debit card transactions and found it lacking.
The bureau noted it is weighing what additional consumer protections may be necessary for overdraft and related services.
A new CFPB report indicated that the majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of overdrafts are repaid within three days. "Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000 percent annual percentage rate," the CFPB said in a release.
The study was based on data from a set of large banks supervised by the CFPB. It found also that among the banks studied, overdraft and Not-Sufficient-Funds (NSF) fees represent more than half of the fee income on consumer checking accounts. The study found that about 8% of accounts incur the majority of overdraft fees.
The CFPB acknowledged that some credit unions and banks do not charge an overdraft fee if the consumer overdraws an account by a small amount; some also cap the number of overdraft and NSF fees they will charge on an account on a single day.
In a related story this week, a Moebs Services study released Tuesday includes information that describes how credit unions remain the most reasonable financial institutions in forgiving members for overdrafts (News Now July 30).
Use the resource link to read the complete CFPB release and to access the study.