Skip to main content

The Death of Overdraft Fees?

Having a top ten U.S. bank pull the plug may not be a mortal blow for the controversial fees. Experts contend that even with the fees, the service adds value for consumers who need it. But business as usual is over for overdrafts. Washington is seizing the opportunity to take action. With the announcement by Capital One that it will be eliminating overdraft and non-sufficient funds penalties, the future of these much-maligned fees in the banking industry has reached a critical juncture.

The $425 billion-asset Capital One becomes the largest bank to eliminate the fees, and follows smaller institutions, such as digital-only Ally and Alliant Credit Union, as well as most fintech neobanks, in making such a move.

Beyond outright elimination of fees, a growing number of institutions have introduced programs to reduce the cost of overdraft/NSF fees. PNC’s Low Cash Mode, Bank of America’s Balance Assist, along with programs from Huntington Bank, Chase, Regions and others have all been efforts to change the nature of overdrafts.

The debate about overdraft fees — which raked in more than $30 billion for financial institutions in 2020 — has been intensifying for years, with many saying they disproportionately harm the financially disadvantaged and lower income consumers. They also generally draw the ire of consumers. As previously reported by The Financial Brand, a survey by Morning Consult found that 52% of adults believe overdraft fees are an unfair penalty on underprivileged consumers.
 

Capital One’s Overdraft Changes
Continue Reading

Comments

Popular posts from this blog

NCOFCU Promotes its First Class of Credit Union Professionals (CCUP)

Announcing the First Class of Certified Credit Union Professionals (CCUP) Key West, Florida – The National Council of Firefighter Credit Unions Inc. (NCOFCU) is thrilled to announce the inaugural class of Certified Credit Union Professionals (CCUP), taking a significant step towards advancing the standards of professionalism and expertise in credit union governance. This elite certification program, launched during the NCOFCU annual educational conference, provides participants with a unique opportunity to enhance their professional development, gain specialized training, and expand their network while receiving guidance from industry leaders. Over the course of two years, participants will have engaged in comprehensive sessions covering critical topics such as governance best practices, regulatory compliance, risk management, and strategic planning. "Earning the CCUP certification signifies a professional's 2-year commitment to excellence and continuous learning in cred...

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 

The Fed announces quarter-point interest rate cut.

  After nine months of staying on the sidelines, the Federal Reserve on Sept. 17 announced a quarter-percentage-point cut, likely the first in a series of reductions to usher in lower borrowing rates for consumers. The rate cut – the Fed’s first since late 2024 – lowers the Fed’s benchmark interest rate to a range of 4% to 4.25%. Officials signaled the possibility of two more rate cuts this year. Typically, the Fed hikes rates or keeps them steady to tame inflation. The central bank lowers rates to juice the economy. While the Fed previously held back on rate cuts due to inflation concerns, a series of disappointing jobs reports showed a weakening labor market. While there are signs that tariffs are starting to show up in consumer prices, Powell previously said a “reasonable base case” is that tariffs spur a one-time price shift rather than a more persistent inflationary effect. "Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up ...

MAP, Dolphin Debit Enter Into New Partnership

  SEATTLE–The CUSO  Member Access Processing  (MAP), a provider of Visa DPS debit, credit, ATM, and digital payment processing, said it is entering into a partnership with Dolphin Debit, the ATM and ITM management company.  “We are excited to partner with Member Access Processing,” Joe Woods, SVP-marketing & partnerships at  Dolphin Debit , said in a statement. “Our two organizations have a strong track record of providing exceptional service and solutions for our clients.   We are confident that this partnership will be a great success for both organizations and the credit unions we serve.”  Dolphin Debit noted it has partnerships with many credit union associations and operates all makes and models of ATM equipment in various branch and off-premise venues, working with over 350 financial institutions across the United States.  ‘Strengthened’ Ability “At MAP, we’re committed to helping credit unions serve their members and grow their car...

Sunday Reading - A brief look at recessions

  Market Downturns       A brief look at recessions Stemming from the Latin word “recessus” (meaning “a retreat”), recessions are sustained periods of declining activity in a country’s economy. During a recession, unemployment rises while economic output falls across a large swath of industries. Recessions are inevitable in modern economies , with one occurring about every six to seven years.   One common definition of a recession is when a country logs two consecutive quarters   of shrinking gross domestic product, but in practice, these econo...