The Consumer Financial Protection Bureau said it is limiting banks’ ability to charge overdraft fees, and potentially saving households hundreds of dollars.
The Consumer Financial Protection Bureau said it has closed a loophole on overdraft fees – limiting banks’ ability to charge them and potentially saving households hundreds of dollars. The regulator said the "outdated" loophole exempted overdraft fees as a finance charge. The final rule, announced Thursday, makes several key updates to federal regulations governing overdraft fees for financial institutions with more than $10 billion in assets.
Typically, financial institutions charge $35 for an overdraft loan despite the fact that the CFPB says the majority of consumers’ debit card overdrafts are for less than $26, and are repaid within three days. The CFPB said this new rule is expected to generate $5 billion in annual overdraft fee savings for consumers, or about $225 per household that pays overdraft fees.
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