“Excessive, automatic overdraft fees are forcing many American families deeper into debt at a time when they are already struggling to make ends meet,” said Dodd, D-Conn. “I am working on a bill to protect consumers from these fees.”
The bill is expected to require credit unions and banks to allow customers to ‘opt-in,” that is specifically request that their overdrafts are protected; and set new disclosures and limits on annual percentage rates.
Drafting of the bill comes after a study of 2,000 banks and credit unions released earlier this month by Moebs Services Inc. showing that overdraft fees collected by banks and credit unions are expected to rise to $38.5 billion this year, form $36.7 billion in 2008, and 44% of banks and credit unions have overdraft income greater than their net income.
Both the House and the Federal Reserve are also proposing new curbs on overdraft protection.
Both CUNA and NAFCU are lobbying against the proposed curbs, arguing that credit union members prefer having their overdrafts automatically covered instead of being embarrassed or inconvenienced by the rejection of credit. NAFCU lobbyists said this weekend they met with Dodd’s staff to discuss the issue but are unaware of the details of the bill.
