Urban Trust Bank has stopped charging overdraft fees on its cards because consumer advocates said they were too high and exceeded interest rate caps in several states.
Urban Trust’s prepaid cards, sold at the outlets of payday lender CheckSmart, offered overdraft protection for a fee of 15 cents for every $1 in negative balance, a rate that exceeded the interest-rate caps in several states, including Arizona and Ohio.
The $566 million-asset bank stopped charging the fees on Friday. It said that it would continue to offer the cards, but without overdraft protection.
The bank’s prepaid cards have come under regulatory scrutiny in the past, so it is not surprising that it has made adjustments to its program. The question remains as to whether or not anyone will be able to sort out a workable credit or overdraft feature for prepaid cards.
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