CFPB Sees Changes in Banks's Overdraft Programs

On 2/10/2022, the CFPB released a blog post discussing the changes that banks are making to their overdraft programs. The CFPB also prepared a table comparing overdraft fees and policies across banks.

In December 2021, the CFPB published research on banks’ continued reliance on overdraft fees and the lack of competition on overdraft terms, highlighting our ongoing and growing concern about the impact of bank overdraft fees on families. With the CFPB's attention on this topic again, there has been an increase in banks implementing changes to their overdraft policies. These announced changes vary widely and include:

  • eliminating NSF fees charged when transactions bounce;

  • reducing the size of the overdraft fee;

  • reducing the number of overdraft/NSF fees the bank can charge you each day;

  • providing or increasing the amount your account can go negative before charging an overdraft fee;

  • providing a grace period for you to bring the account back to positive before charging an overdraft fee; and

  • eliminating “extended” or “sustained” overdraft fees charged when the account is not brought back to a positive balance after a certain period of time.

In the blog post, the CFPB also published a table providing a snapshot of large banks’ overdraft and NSF practices. The table shows key overdraft/NSF practices of the twenty banks earning the most in overdraft/NSF revenue through the first three quarters of 2021, reflecting over 80% of the total overdraft/NSF fees earned by banks with assets over $1 billion.

According to the CFPB, they will continue to monitor these developments to better understand the impact of these changes, and to work to ensure that banks continue to evolve their businesses to reduce reliance on overdraft and NSF fees.

Read the full blog post here.

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