Lawmaker seeking more restrictions on overdraft fees

6:57 AM, May 15, 2012   |    comments
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WASHINGTON D.C -  U.S. Representative Carolyn Maloney (D-NY) has introduced a bill called 'The Overdraft Protection Act'.  If approved, it would do a number of things to add restrictions to what banks can do with overdraft fees.

The bill would require overdraft fees to be reasonable and proportional to the cost of the transaction.  It would limit the quantity of fees that can be charged to one per month and six per year.  And it would ban banks from manipulating the order in which transactions are posted.  Some say this is done intentionally to maximize overdraft fees.

Most banking customers out there prefer that their debit card be declined, rather than accepted, while racking up hundreds of dollars in overdraft fees before they know it.  As it stands with many banks, you could get hit with an overdraft fee on a $3 cup of coffee, and then it becomes a $35 cup of coffee.  The house bill would make it so it's not just one fee for all insufficient transactions.

The average overdraft fee is at $30.  Last year it was at $27.50.

The Consumer Financial Protection Bureau is already in the middle of investigating nine U.S. banks to see if additional regulations are needed when it comes to how those banks charge overdraft fees to customers' checking accounts.

They're expected to decide at the end of this year if additional regulations are needed.


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