“Charging overdraft fees that can sometimes be more than five times the amount of the original purchase is abhorrent,” Michigan AG Dana Nessel said.
Need to Know
- Michigan AG Dana Nessel called out top U.S. banks’ CEOs to eliminate all overdraft fees on consumer accounts by this summer.
- Overdraft fees have had harmful effects on millions of consumers nationwide – but especially working families, communities of color and those who live paycheck to paycheck.
- Last year, Forbes reported that overdraft fees cost consumers $12.4 billion in 2020.
MICHIGAN—Have you ever overdrawn your checking account? If so, you’re not alone. Overdraft banking fees have had harmful effects on millions of consumers nationwide, particularly those in working families and communities of color, by straddling them deeper into debt.
Studies have shown that the vast majority of these fees fall on low-income consumers, who earn less than $50,000 a year, thus mostly affecting the working class and the large number of Americans who live paycheck to paycheck. Recently, Michigan’s Attorney General took a stand against the banking practice.
“Charging overdraft fees that can sometimes be more than five times the amount of the original purchase is abhorrent,” Attorney General Dana Nessel said in a release. “By eliminating these fees altogether, banks will show that they care as much for their customers’ financial well-being as they do their own.”
Nessel joined 18 other attorneys general in a multi-state action, demanding that banks phase out all overdraft fees on consumer bank accounts by this summer to create a fairer and more inclusive consumer financial system.
In letters to the CEOs of JPMorgan Chase, Bank of America, U.S. Bank, and Wells Fargo— four banks that earn a significant income from overdraft fees, according to the Consumer Financial Protection Bureau (CFPB)— Nessel and her colleagues write that action is needed “to eliminate the crushing impacts of such fees on consumers and families.”
“We know the costs of goods and services are at an all-time high,” Nessel said. “That’s why it’s more important than ever to fight against companies that charge fees that ultimately do more to hurt the customer than offset their own operating costs.”
In a study, CFPB noted that three of the U.S.’s top five banking institutions were responsible for 44% of total overdraft and overdraft-like fees in 2019, among major banks. Elimination of overdraft fees by just the four institutions called out in the coalition’s action would drastically improve the financial health of millions of Michiganders and consumers across the country.
Last year, Forbes reported that overdraft fees cost consumers $12.4 billion in 2020. In some instances, consumers can be charged $35 for a purchase of $5 or less. The consequences are devastating to consumers’ financial health and, in the worst-case scenarios, result in individuals not using banking services.
BY ANNA LIZ NICHOLS, MICHIGAN ADVANCE MICHIGAN—Two months after a federal judge panel ordered Michigan’s redistricting commission to redraw seven...
BY ANNA LIZ NICHOLS, MICHIGAN ADVANCE MICHIGAN—Earlier this month, reproductive rights groups joined together for a lawsuit looking to throw out...
A decision by the Alabama Supreme Court is raising concerns about the future of fertility care. But four US representatives from Michigan are...
Severe thunderstorms with large hail and several possible rare winter tornadoes toppled trees, cut power and damaged homes in the Chicago area and...
These questions have crossed the minds of many—we found the perfect person to answer them bluntly. MICHIGAN—Whether you're a seasoned stoner or just...