The Consumer Financial Protection Bureau (CFPB) published a report on Dec. 1 showing details of his investigation into what he calls “abusive overdraft charges” by banks. This report was released as Capitol One announcement eliminate all overdraft and insufficient funds (NSF) fees for its consumer banking customers.
The CFPB report showed that banks have become increasingly dependent on NSF overdrafts and receipts, which the agency said topped around $ 15.47 billion in 2019. In addition, three of the top ten banks – JPMorgan Chase, Wells Fargo and Bank of America – reported 44% of the total.
“This welcome research once again illustrates the need to put an end to abusive overdraft fees – especially as these fees are primarily borne by those who can least afford them,” said Rachel Gittleman, Outreach Manager of the Consumer Federation of America Financial Services in December. 2. “Consumers cannot wait for individual banks to end this practice, like Capital One announced yesterday. The cost is just too high – overdraft fees can cost consumers hundreds in a single day and can push people out of the banking system, exacerbating financial exclusion. “
Financial data revealed that 80% of all vendor overdraft revenue comes from less than 9% of consumer accounts, according to the CFPB report. These consumers have an average account balance of $ 350 and pay 10 or more overdrafts per year. The average overdraft fee is almost $ 35, according to a study of the Center for responsible lending.
If you’re struggling with rising overdraft fees and looking to cut costs, you may want to consider lowering your monthly expenses. For example, you can refinance your home loan to help you save on your monthly mortgage payment. Visit Credible to find your personalized rate and see how much you could save.
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Capital One becomes the first to eliminate overdraft fees
Capitol One’s announcement is a major milestone for the banking industry, as the institution is the only bank in the top 10 and the sixth retail bank in the United States to have made the move to eliminate these fees.
“The bank account is the lifeblood of a person’s financial life,” said Richard Fairbank, Founder and CEO of Capital One. “This is how people get their paychecks, pay their bills and manage their finances. Overdraft protection is a useful and practical feature and can be an important safety net for families. We are delighted to offer this service for free.
Experts say the move will help the most vulnerable consumers pay additional fees to financial institutions.
“Capital One’s complete elimination of overdraft and NSF fees is a historic moment for American families,” said Lauren Saunders, associate director of the National Consumer Law Center. “This decision by Capital One will have enormous benefits for the most vulnerable consumers. It is essential that we continue to work to make the banking system more inclusive and fair for all.”
If you’re having trouble making your monthly payments, refinancing your private student loans might be an option to help cut expenses and save money. Visit Credible to compare multiple lenders at once and choose the one that suits you the best.
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Will 2022 become the year of open banking?
The idea of an open bank, which enables access and control of consumer bank accounts through financial technology companies and third-party applications using application programming interfaces (APIs), is gaining popularity. Now the CFPB is pushing the initiative, saying tying financial information to service providers would prevent consumers from getting trapped with their bank.
“Unfortunately, changing bank accounts isn’t easy. It involves new account numbers, new debit cards, updating direct deposit, updating direct debits and much more,” said Rohit Chopra, Director of CFPB. said during a press call. “If America can move to open banking infrastructure, it will be more difficult for banks to trick customers into an account for the purpose of fee collection.”
Today, experts say that as the number of third-party vendors who share information from consumers’ financial accounts grows, the open banking ecosystem could see significant inroads in the coming year.
“The CFPB’s remarks this week prove that open banking is maturing slowly but surely in the United States,” said Vanni Parmeggiani, GoCardless director of open banking and real-time payments. “We have seen the foreshadowing of this with Biden’s decree this summer to encourage competition. in the financial industry, and Chopra’s comments show that the whole concept is gaining momentum.
“As regulators continue to push in this direction, we expect 2022 to be the year of bank grand opening, especially as the difference in pace between the US and other countries grows larger. obvious, “Parmeggiani continued.
Business models are changing and the sharing of consumer data is on the increase, which could change the future of banking in the coming year. However, if you are currently struggling financially, a personal loan could help you pay off high interest debt. Contact Credible to speak to a personal loan expert and get all your questions answered.
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