Overdraft

The need for new rules

Checking accounts are the most widely used financial product in the country. Yet poorly regulated bank overdraft practices continue to cause consumers to unknowingly incur multiple costly fees for a single transaction. Pew is promoting new rules to make overdraft programs safer and more transparent.

Overdraft fees are a significant financial strain on many Americans
Overdraft fees are a significant financial strain on many Americans
Opinion

Overdraft Fees Disguised as Protection Are Actually Harmful High-Cost Credit

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Opinion

With their friendly sounding names, these might appear to be products that are helpful to consumers. And, in fact, these names were appropriate more than 20 years ago when banks first started covering consumer overdrafts—infrequently and on an ad hoc basis. But that’s not the case today. Research from The Pew Charitable Trusts over the past five years demonstrates the need to reform what has morphed into a very harmful product for consumers.

Checks and Balances
Checks and Balances
Data Visualization

Bank Overdraft Policies Matter

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Data Visualization

This interactive tool follows three typical people—Mike, Sarah, and Jen—as they go about their day. They are all responsible with money, but their budgets are a little tight. We will explore how, depending on where they bank, their experiences with overdraft fees can differ dramatically, and why it pays to know your institution's policies and practices. Click on a character to start.

overdraft atm
overdraft atm
Fact Sheet

Overdraft Facts

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Fact Sheet

This fact sheet examines the relationship between the overdraft policies of 42 of the nation’s 50 largest banks and the revenue those banks earn from overdraft fees. It overlays findings from Pew’s Checks and Balances: 2015 Update with Federal Deposit Insurance Corp. data for the first half of 2015 and demonstrates that bank practices predict both how much revenue these hidden, back-end fees generate and the impact they have on consumers. 

credit card
credit card
Article

Overdraft Complaints

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Article

Since 2011, Pew has provided considerable evidence that bank overdraft practices—in which consumers are charged substantial fees for the processing of ATM and debit card transactions that overdraw their accounts—are not safe or transparent. Complaints collected by the Consumer Financial Protection Bureau (CFPB) provide additional insight into the problems that consumers experience with overdraft and demonstrate the need for new rules that improve the safety, fairness, and transparency of overdraft practices.

Additional Resources

atm
atm
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Heavy overdrafters use a large proportion of income to pay their fees
Heavy overdrafters use a large proportion of income to pay their fees
Fact Sheet

Heavy Overdrafters

A financial profile

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Fact Sheet

Pew urges the CFPB to write new rules to ensure that overdraft programs are safe and designed only for infrequent and accidental occurrences.

Overdrawn
Overdrawn
Report

Overdrawn: Consumer Experiences with Overdraft

Survey shows checking account holders still confused, unhappy with practices and fees

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Report

This report finds that many consumers still express confusion and disapproval about bank overdraft practices and the rules surrounding them. Despite federal requirements that consumers must agree to debit card overdraft coverage before any fees are charged or services are provided, Pew’s survey finds that more than half of those who incurred a debit card overdraft penalty fee do not believe they ever opted in to the service. This report includes policy recommendations for the Consumer Financial Protection Bureau to make overdraft programs safer and more transparent.