The White House has proposed reducing bank overdraft fees to as low as $3, a move aimed at easing financial strains on Americans, especially those living paycheck to paycheck.
This proposal, part of President Biden’s effort to eliminate burdensome fees, could significantly cut revenue for major banks, currently earning around $8 billion annually from these charges. Banks typically levy overdraft fees, sometimes exceeding $30, when account balances fall below zero, a practice that has evolved with the rise of debit card usage.
The Consumer Financial Protection Bureau (CFPB) is considering either requiring banks to charge only the cost of providing overdraft services or setting a standard fee ranging from $3 to $14. This initiative targets banks with assets over $10 billion and is part of a broader campaign against “junk fees.” If implemented and upheld against expected legal challenges, the new regulation could take effect in autumn 2025.
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