The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.
Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.
Do they charge a flat fee in the US for overdrafting your account instead of absurd interest on the overdrawn amount?
Typically yes… Even my Credit Union has a $35 fee for the first overdraft in a given time frame and then it goes up by $5 for each subsequent overdraft in that same period.
The same credit union will, as a courtesy, refund up to 3 overdraft fees per year but only if you call in and basically beg a customer service rep because you’re aware of the policy.