Consumers want legislation limiting overdraft fees, as the largest banks maintained charges ranging from $19 to $39, according to a survey.
“Changes to bank overdraft programs announced by some of the largest banks last fall have not cut the steep cost of overdraft fees or provided consumers real control over their checking accounts,” said Jean Ann Fox, director of financial services for the Washington-based Consumer Federation of America, in a statement last week.
Sixty-five percent of 1,015 consumers surveyed in January said they favored requiring bank overdraft fees to be related to the bankís cost of providing the service, and 86 percent supported requiring banks to disclose on an ATM screen when a withdrawal will cause an overdraft, according to the survey. The telephone survey was conducted by Opinion Research Corp. for the CFA.
Fed rules announced Nov. 12 will prohibit banks from charging overdraft fees at an ATM or on debit-card transactions unless a customer has agreed in advance to pay for exceeding account balances. Those rules take effect July 1.
Twelve of 15 banks surveyed in January charged at least $25 for an initial overdraft, the CFA said in the statement. Thirteen of the banks charge at least $32 for a second overdraft, the group said.
U.S. Bancorp, based in Minneapolis, charged the lowest initial overdraft fee, $19. The highest fee came from Citizens Bank, based in Providence, R.I., which levied $39 for the third overdraft in a year.
Bills in Congress
Bank of America Corp. doesn't charge fees unless the total amount overdrawn in a day exceeds $10, the group said.
Rep. Carolyn Maloney, a New York Democrat, and Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, have introduced legislation that would restrict banks' ability to charge overdraft fees.
Both bills would permit one overdraft fee a month or six in a year, and both would require fees to be reasonable and proportional to the bankís cost of covering the payments.
The Fed rules will make sure consumers wonít face unexpected charges, said Nessa Feddis, vice president and senior counsel at the American Bankers Association. Limiting the size of the fees, as Dodd and Maloney call for, may lead banks to reject a transaction leaving consumers worse off, she said.
“Consumers should be the ones to decide whether they want a particular service, not the government,” Feddis said.