Overdraft fees may sound like a good idea, at first. But a new report by the Consumer Financial Protection Bureau (CFPB) found consumers who use the overdraft fee system end up with higher account fees and banks shut down their accounts more often than they close accounts of customers who don’t take the protection.
CFPB Chief Richard Cordray says, “Consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that some overdraft practices may increase consumer costs beyond reasonable expectations. What is marketed as overdraft protection can, in some instances, create greater risk of consumer harm.”
Confusing Fee Structure
The report found a confusing fee structure and overdraft rules that many may not understand. The average consumer who overdrew an account paid $225 in insufficient fund charges during the course of a year.
It’s not clear how the report will influence what banks do in the future.
WATCH A VIDEO
Watch ConsumerMojo.com’s video Overdraft Fees-No So Great