Out Of Balance? Big Banks Still Overcharging Customers
It’s no wonder big banks get a bad rep. It’s clear they’ve learned nothing from The Great Recession that is still having ripple effects on the nation’s economy. According to a new Pew Charitable Trusts study of checking account practices at 50 of the nation’s largest banks and credit unions, banks are still using shady practices that can cost customers.
The study found that half of big banks are still reordering consumer transactions from highest amount to lowest, which can be confusing to customers who then overdraw and thus get charged an overdraft fee costing consumers $32 billion a year, according to the Consumer Financial Protection Bureau. The number of banks doing this balance trick has increased from 47 percent last year.
Those overdraft fees add up quickly! “More than 70 percent of banks charge $35 or more when a customer’s withdrawal exceeds their account balance, and in many cases, fees can be charged as many as four times in a single day,” reports Yahoo!
Another study of U.S. banks published in January, which was more expansive than the new Pew report, found that overdraft charges are increasing each year. Moebs Financial Services looked at more than 2,800 banks and found the median fee for overdrawing a checking account was $30 in 2013, up from $29 in 2012.
“Consumers might be trying to hide from the banks, but the banks keep coming up with creative ways to pick their pockets,” Ed Mierzwinski, the consumer program director at the public advocacy group U.S. PIRG, told The Huffington Post.
Some things were supposed to change in 2010 when the Federal Reserve issued rules that stopped banks from putting account holders in overdraft protection programs they didn’t ask for. But, said Mierzwinski those rules have not been effective, yielding unexpected consequences that hurt consumers. Other banks increased the penalties on bounced checks so consumers will opt for overdraft protection.
Bank Of America, however, was found guilty of drastically charging customers overdraft fees. BOA has been ordered to repay $727 million to its customers after being found guilty of sketchy marketing practices by Consumer Financial Protection Bureau. BOA and FIA Card Services must pay $727 million in relief to 1.4 million victims of the company’s deceptive marketing of credit card add-on products such as identity theft protection and programs that are supposed to help cardholders who lose their jobs, reports The Consumerist. The company must also pay a $20 million civil money penalty to the CFPB.