Pew: Consumers still confused by overdraft
June 30, 2014 – A 2013 study by The Pew Charitable Trusts shows consumers were still confused about overdraft fees and that a large percentage – though down some from 2012 – would rather be declined a transaction than hit by an overdraft fee.
Key findings of the study, announced late last week, include:
- 52 percent of overdrafters don't recall opting into coverage and were still charged a fee over the past year.
- 68 percent of overdrafters would rather be declined than pay a $35 overdraft fee. This is down from 75 percent in 2012.
- 80 percent say overdraft practices and fees should be more closely regulated.
- 50 percent of overdrafters said overdraft penalty products hurt consumers more than help them; 41 percent said they helped more than hurt.
Last year, overdrafters reported paying total fees averaging $69 for their most recent overdraft. The median amount reported was $35. One-fourth of overdrafters said they paid $90 or more in the last overdraft.
Pew reiterated recommendations lodged last year that CFPB require financial institutions to make overdraft programs safer and more transparent; and that it bar transaction reordering that maximizes overdraft fees and ensure that fees are reasonable and based on actual cost of providing the service.
CFPB, in releasing last year's report, said it found nothing in its report that suggests banks and credit unions should be precluded from offering the service. Overdraft is listed as being in "prerule stage" on CFPB's Spring 2014 regulatory agenda.
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