CFPB Overdraft Rule: How It May Backfire on Consumers
The CFPB has capped overdraft fees at $5, aiming to reduce costs for consumers. While this helps those hit with high fees, it may lead banks to cut or limit overdraft services, affecting people who rely on them to cover essential expenses.
Research shows 20% of consumers overdraft yearly, with rates higher for those living paycheck to paycheck. Overdraft fees, often $29 per incident, act as a safety net for emergencies. Limiting fees may push banks to reject transactions, causing more financial stress through late fees or unpaid bills.
Banks must now adjust to the rule by capping fees, restructuring them, or treating overdrafts as credit. These changes could reduce access to overdraft services, leaving consumers fewer options during financial emergencies.
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