The non-partisan Center for Responsible Lending recently issued a study that criticizes overdraft services. The organization’s results build on the Consumer Financial Protection Bureau’s study from earlier this year.
The organization acknowledges in the report the 2010 law that curtailed some financial institution practices such as automatic overdraft enrollment. The report focuses on the problem that occurs for consumers who regularly overdraw and how that impacts their access to cash and checking accounts in general.
From the Bay State Banner:
“Over time, the repeated fees strip away consumers’ cash assets, leaving them financially worse off than when they first overdrafted and unable to meet obligations they otherwise could have met even with no overdraft coverage at all,” says CRL.
The CFPB has yet to issue amended rules for overdraft programs, but we continue to believe that these rules will be issued this year. The rules will focus on practices such as the maximum number and amount of overdraft fees, items processing order, and more stringent disclosure requirements.
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