this post was submitted on 18 Jan 2024
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“Banks call it a service,” the president said. “I call it exploitation.”

The Biden administration unveiled a new rule Wednesday aimed at slashing bank overdraft fees to as low as $3, a move the president said would help end abusive practices by financial institutions.

Under the proposal, banks could continue to charge fees when a customer’s account falls below zero, but either at a price in line with the bank’s actual costs to administer the overdraft or at an established benchmark created by the new rule.

The Consumer Financial Protection Bureau (CFPB) proposed potential fees of $3, $6, $7 or $14 and is seeking feedback from banks and the public on what would be appropriate. Current overdraft fees often push $30 or more, taking a significant bite out of low-income accounts.

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[–] Ekybio@lemmy.world 80 points 1 year ago (3 children)

Biden: Wants to do something good for a lot of people

GOP: "Thats communism and evil and unamerican and unchristian and racist and the West is falling! Quick, do something before he helps the poor!"

[–] dhork@lemmy.world 35 points 1 year ago (2 children)

Democrats: "This one thing doesn't go far enough at all! There is no way in good conscience I can support this man!"

Twitter users: I have no idea how government works but Biden didnt do everything i wanted so im not voting

[–] FuglyDuck@lemmy.world 9 points 1 year ago (1 children)

It doesn’t go far enough. Over draft fees happen on a checking account. Banks know exactly how much is available.

Certain banks are also notorious for charging overdraft fees when there was literally no overdraft.

[–] dhork@lemmy.world 9 points 1 year ago (1 children)

Certain banks are also notorious for charging overdraft fees when there was literally no overdraft.

There's an explanation for at least one way they do that. Certain transactions end up being "pre-authorized" for a larger amount before they settle. Gas stations are a common place for this: you swipe the card when you first get to the pump, then you pump, and then you pay the bill based on how much you pump. When the card is swiped, a "hold" gets put on your account for a large amount, perhaps $150, and then the charge goes through for the actual amount you paid.

When you pay by credit card, this hold goes against your available credit, and since most people are nowhere near their limit this ends up not being that big a deal. However, when you pay by debit this hold "freezes" actual cash in your bank account, which then can't be used for anything else and can cause you to overdraft while there is still money in your account. Tnis "freeze" may not actually be listed on your account anywhere. What's even worse is that the hold can last for days, and you may not even realize it.

[–] lobut@lemmy.ca 18 points 1 year ago

Voter: "I don't see how Biden's any different"

[–] werefreeatlast@lemmy.world 12 points 1 year ago (1 children)

It's unfair that a bank can make 3 dollars off me for not having 3 dollars to pay. I have to have thousands of dollars in the bank to make 3 dollars. So I think the overdraft should be the exact amount over drafted plus the interest per the amount overdrafted. That's fair.

[–] OldWoodFrame@lemm.ee 3 points 1 year ago* (last edited 1 year ago)

It's not fair because of the risk of total loss. You giving money to the bank earning interest, there's no risk the bank is just going to stop responding to you and keep your money. There's a chance someone who owes the bank money is just gonna stop going to that bank and they'll have to write off the full amount as a loss.

But, I believe this is essentially what they do in Canada. It's two different rates, because a negative balance is essentially taking out a non-collateralized loan. But you don't have to ask extra permission on small amounts, you just owe the interest.

[–] cupcakezealot@lemmy.blahaj.zone 8 points 1 year ago (1 children)

do away with "account maintenance fees"for not having a big enough balance too

(also things like these are why i don't take the people who say biden is a conservative or he doesn't do anything seriously)

[–] blazeknave@lemmy.world 3 points 1 year ago

All poor people taxes while we're at it. Inertia is fucked up.

[–] GiddyGap@lemm.ee 7 points 1 year ago
[–] Ensign_Crab@lemmy.world 5 points 1 year ago (4 children)

The Consumer Financial Protection Bureau (CFPB) proposed potential fees of $3, $6, $7 or $14 and is seeking feedback from banks and the public on what would be appropriate.

And they will listen to banks and not the public.

[–] naught@sh.itjust.works 5 points 1 year ago (1 children)

Wait so Biden introduces a plan to at LEAST halve overdraft fees and we're whining before anything even happens? Is it not reasonable to at least take input from the industry you're regulating? Don't you want to know how they will respond and what impact they foresee, biased or not?

[–] Ensign_Crab@lemmy.world 0 points 1 year ago (1 children)

Wait so Biden introduces a plan to at LEAST halve overdraft fees and we’re whining before anything even happens?

Until it happens, it's the same as BBB, the minimum wage increase, and the public option. Something Democrats say they want to do. Now they just need an excuse to not do it.

[–] naught@sh.itjust.works -1 points 1 year ago

The main obstruction to min wage increases and public healthcare is certainly not Dems, right? Who fucked up Obamacare? Who's repealing child labor laws? What party controls states with min wages at the federal minimum? I agree we shouldn't count our chickens before they hatch, but one party is supplying the eggs here and the other is stomping on them gleefully...

[–] OldWoodFrame@lemm.ee 4 points 1 year ago

If they only listened to the banks they wouldn't propose the rule at all.

[–] cupcakezealot@lemmy.blahaj.zone 2 points 1 year ago* (last edited 1 year ago) (1 children)

banks are the ones implementing them and they don't have to listen to the cdpb, thanks to the supreme court, so it's best to work with them

[–] Ensign_Crab@lemmy.world -1 points 1 year ago

If they don't have to listen to it, it's not a rule.

[–] OldWoodFrame@lemm.ee -2 points 1 year ago

Isn't it already the case that you can just set it so overdrafts won't work and if you try to spend money you don't have it just rejects? I'd rather have the rule be that by default with an opt-in for overdrafts that cost money.

Just seems weird to set hard dollar numbers in a rule, they're going to get outdated and not worth it to the banks so they'll just turn it off themselves, I'd rather have the option.