Overdrafts: Service fee or “junk” fee?

In President Joe Biden’s State of the Union address on February 7, he called on Congress to crack down on “junk fees.” He defined the term in his address as “those hidden surcharges too many companies use to make you pay more.” Among those attributed to this murky category were charges related to overdraft services.

The Independent Community Bankers of America (ICBA) wasted no time in rejecting his remarks as “misleading” and a “mischaracterization,” stating in part:

“Community banks provide a wide range of products and services that customers may select to address situations in which they’ve overdrawn their account, including overdraft programs, free ad hoc solutions, alerts about their account status, account transfers, and more.

[…] Given these realities, current community bank practices are appropriate and do not constitute surprise ‘junk fees,’ despite the misrepresentation of the community bank business model by President Biden and the Consumer Financial Protection Bureau.”


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