The Biden administration proposed banning another type of bank “junk fee” on Wednesday, targeting fees that are typically charged by banks when a transaction is declined in real time. (AP Photo/Manuel Balce Ceneta)
The Biden administration proposed banning another type of bank “junk fee” on Wednesday, targeting fees that are typically charged by banks when a transaction is declined in real time.
It's the second major proposal by the Consumer Financial Protection Bureau over fees that Americans sometimes run into when they bank, following the bureau's announcement that it plans to reduce overdraft fees to as little as $3.
The CFPB's proposal on Wednesday focused on a narrower set of transactions: when a customer tries to withdraw money, send a payment immediately or make a purchase and that transaction is declined at the time of the transaction due to lack of sufficient funds. The CFPB used the example of a customer trying to buy $100 in groceries with $90 in their bank account, and the transaction is declined at checkout.
When this happens, banks can charge a fee when a customer attempts to withdraw or debit their account more than their available funds. This fee, which the bureau has previously estimated to be around $34, would be entirely banned under the CFPB's new rules.
These types of transactions differ from overdrafts because a transaction in an overdraft scenario is approved and that customer’s account goes negative. They are also different from non-sufficient fees — also known as “bounced check fees” — because those transactions were also preapproved by the customer, like a gym membership or utility bill.
Unlike the overdraft regulations announced last week, the bureau's proposed regulations would apply to all banks and credit unions, even small banks. The overdraft rule applied only to larger banks with more than $10 billion in assets.
“Banks should be competing to provide better products at lower costs, not innovating to impose extra fees for no value,” said CFPB Director Rohit Chopra in a statement.
The bureau did not give an estimate on how many of these specific transactions were still occurring at the moment. The bureau's research shows that banks with over $10 billion in assets have eliminated nearly all of their NSF fee revenue over the last several years.
Appointed by President Joe Biden to the CFPB in 2021, Chopra has focused a significant part of the bureau's work on combating unnecessary fees and what he considers exploitative practices by the banks. Biden has made the elimination of “junk fees” one of the cornerstones of his administration’s economic agenda heading into the 2024 election.
You'll just have to wait for interest rates (and prices) to go down. Plus, this deal's a steel, the big carmaker wedding is off, and bribery is back, baby!
It’s a chicken-and-egg problem: Restaurants are struggling with record-high U.S. egg prices, but their omelets, scrambles and huevos rancheros may be part of the problem. Breakfast is booming at U.S. eateries. First Watch, a restaurant chain that serves breakfast, brunch and lunch, nearly quadrupled its locations over the past decade to 570. Fast-food chains like Starbucks and Wendy's added more egg-filled breakfast items. In normal times, egg producers could meet the demand. But a bird flu outbreak that has forced them to slaughter their flocks is making supplies scarcer and pushing up prices. Some restaurants like Waffle House have added a surcharge to offset their costs.
William Falcon, CEO and Founder of Lightning AI, discusses the ongoing feud between Elon Musk and Sam Altman, and how everyday people can use AI in their lives.
U.S. tariffs on steel and aluminum “will not go unanswered,” European Union chief Ursula von der Leyen vowed on Tuesday, adding that they will trigger toug
The Trump administration has ordered the Consumer Financial Protection Bureau to stop nearly all its work, effectively shutting down the agency that was created to protect consumers after the 2008 financial crisis and subprime mortgage-lending scandal. Russell Vought is the newly installed director of the Office of Management and Budget. Vought directed the CFPB in a Saturday night email to stop work on proposed rules, to suspend the effective dates on any rules that were finalized but not yet effective, and to stop investigative work and not begin any new investigations. The agency has been a target of conservatives since President Barack Obama created it following the 2007-2008 financial crisis.
Jeff Benedict, author of 'The Dynasty,' weighs in on the Kansas City Chiefs being the next big dynasty, who he thinks will win Super Bowl LIX and more. Watch!
