The CFPB has officially implemented new overdraft fee limits.
Conway Gittens:
The latest inflation numbers came in a little hot. Producer prices rose more than expected in November – up 0.4 percent. Meanwhile, prices were up 3 percent over the past twelve months, that’s the biggest annual gain since February 2023.
In other news, the final rule cracking down on overdraft fees was announced by the Consumer Financial Protection Bureau. The agency created in wake of the Great Financial Crisis said the new rules will keep $5 billion a year, or $225 per household, in Americans’ pockets and out of the hands of the banks.
According to the rule, banks can charge a flat overdraft fee of $5 per occurrence compared to the average current penalty of $35, or simply charge customers the amount it costs to cover the overdraft. The third alternative allows the bank to charge whatever it wants as long as customers know what the interest rate on the overdraft loan is up front.
In a statement released with the ruling, CFPB Director Rohit Chopra said ”For far too long, the largest banks have exploited a legal loophole that has drained billions of dollars from Americans’ deposit accounts. The CFPB is cracking down on these excessive junk fees and requiring big banks to come clean about the interest rate they’re charging on overdraft loans.”
It is supposed to go into effect on October 1, 2025. There are doubts, however, that it will ever see the light of day under a pro-business Trump administration.
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