More than a dozen Democratic attorneys general called on four major banks to scrap overdraft fees, saying they should join a small number of competitors by eliminating the “harmful junk fees.”
The letters to JPMorgan Chase, Bank of America, Wells Fargo and U.S. Bancorp are the latest example of government pressure on overdraft fees — though this time the pressure is coming from individual states, rather than Biden administration regulators.
In the past year, all four of the four banks that were targeted Wednesday have announced changes to their overdraft programs, which will likely substantially reduce revenues they get from the often-criticized charges.
But those steps are not enough, and “further action is needed to eliminate the crushing impacts of such fees on consumers and families,” the state AGs wrote in their letters, which were addressed to the CEO of each of the banks.
Signatories included New York AG Letitia James, California AG Rob Bonta, Illinois AG Kwame Raoul and their counterparts in more than a dozen other states. North Carolina AG Josh Stein signed three of the letters, but not the one sent to Bank of America, which is headquartered in Charlotte.
The state officials pointed to moves by Citigroup and Capital One Financial to eliminate overdraft fees. Ally Financial had earlier announced it would stop charging the fees.
Those are “vital steps toward creating a fairer and more inclusive consumer financial system,” the state AGs wrote, saying that low-income customers and people of color are disproportionately hit with overdraft charges.
In a statement, Consumer Bankers Association President and CEO Richard Hunt said banks’ recent overdraft changes have helped lead to a decline in overdraft usage and that many customers who incur the charges “do so knowingly and count on it when unexpected expenses arise.”
“America’s leading banks have always listened to their customers and are taking proactive steps to help them avoid unintended fees while protecting their access to a much-needed emergency safety net,” Hunt said.
A Bank of America spokesman did not respond to a request for comment. The bank said in January it was
A few other banks, such as Buffalo, New York-based
JPMorgan, Wells Fargo and U.S. Bank have kept the price of an overdraft at roughly $35, though each has
JPMorgan last year raised its overdraft cushion — the amount that a customer can overdraw an account without incurring a fee — from $5 to $50. It also announced a new option to help customers who overdraw their accounts by more than $50, and has said that it will let customers access their direct deposit funds up to two days early.
U.S. Bank plans to raise a similar overdraft cushion from $5 to $50, and to give customers a 24-hour grace period to remedy overdrafts by depositing funds, according to a letter CEO Andy Cecere sent last week to Senate Banking Committee Chairman Sherrod Brown, D-Ohio.
Wells Fargo said in January that it would eliminate fees for any transfers customers make from linked accounts to help avoid overdrafts, allow customers to access direct deposit funds up to two days early and introduce a new 24-hour grace period.
The San Francisco megabank has also said it will launch a new short-term credit product that will let customers borrow up to $500 for a fee.
