Pennsylvania Attorney General Josh Shapiro has joined a coalition of Attorney Generals seeking to eliminate bank overdraft fees.
The group of State Attorneys General has released a letter urging CEOs of JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo to create a more fair and inclusive consumer financial system by eliminating overdraft fees in the upcoming months. According to a 2019 report by the Consumer Financial Protection Bureau (CFPB), “JPMorgan Chase, Wells Fargo, and Bank of America—brought in 44% of the total reported that year by banks with assets over $1 billion.”
Typically around $35 each, overdraft fees are charged when financial institutions determine an account has insufficient funds to cover pending expenses. The fees disproportionately affect lower-income wage earners who typically carry a checking account balance of a few hundred dollars or less. CFPB research shows that those who pay ten or more overdraft fees a year account for over 75% of overdraft fees nationwide- averaging $380 per year or roughly one week’s pay for lower-wage earners. Banks raked in an estimated $15.5 million in overdraft fees in 2019.
“We’ve seen how these fees hit families and communities of color harder than others,” said AG Shapiro. “It starts a vicious cycle that drives them deeper and deeper into debt. Eliminating these fees helps create a system that works for everyone.”
In recent years, several banks have chosen to lower overdraft fees. Capital One eliminated them in 2021, and Citi Bank did so earlier this year. Attorneys general for California, Connecticut, the District of Columbia, Delaware, Illinois, Iowa, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina (all except Bank of America), Oregon, and Washington have all joined in sending the letter to bank CEOS.
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