When a banker names his boat ‘Overdraft,’ you know things are amiss

Banks and credit unions made $15.5 billion in overdraft fees in 2019.

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Editorials

December 13, 2021 - 9:11 AM

Banks are under political pressure to modify their fees and policies on account overdrafts. (Andrew Marginean/Dreamstime/TNS)

Overdraft fee horror stories are well known: A mom goes to the store to buy milk and peanut butter. She doesn’t have enough money in her account. Her bank charges an overdraft fee, making a $5 purchase suddenly cost $40.

These fees are often referred to as a “poverty tax” and a reverse Robin Hood scheme since it’s overwhelmingly low-income customers who pay them, and the charges have resulted in substantial profits for many banks and credit unions. A former bank executive even named his boat “Overdraft.”

It’s welcome news that Consumer Financial Protection Bureau Director Rohit Chopra plans to enhance scrutiny on overdraft and non-sufficient-fund fees. Already, his threat of action appears to be driving change.

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