The Star Beacon; Ashtabula, Ohio

World, nation, state

June 12, 2013

Banks do better on overdraft fees than customers

WASHINGTON — Overdraft protection often is a better deal for banks than for consumers, a new study by a federal watchdog agency reveals.

The report, to be released Tuesday by the Consumer Financial Protection Bureau, found that consumers who sign up for banks’ optional overdraft coverage on debit card transactions and ATM withdrawals pay higher fees and are more likely to end up with involuntary account closures than those who decline.

Banks profit from consumers’ misfortune.

Fees for overdraft and nonsufficient funds accounted for more than 60 percent of banks’ total revenue from consumers’ checking accounts in 2011, according to the report.

“Many financial institutions market their overdraft services as a protective measure that offers consumers greater peace of mind and security,” Richard Cordray, the bureau’s director, said Monday in a call with reporters. “They correctly note that consumers often benefit when overdraft transactions are paid, which helps avoid returned checks or declined transactions. But our study also raises questions. What is marketed as overdraft protection can in some instances put consumers at greater risk of harm.”

Cordray said the bureau plans to research overdraft programs further before taking any policy action.

Overdrafts occur when customers try to withdraw or spend more money than they have in their accounts. Banks can block the transaction and charge an “insufficient funds fee,” or allow the money to go through and charge an overdraft fee.

In mid-2010, a new rule by the Federal Reserve stopped banks from charging overdraft fees for ATM withdrawals and most debit card transactions unless the consumer agreed first.

Monday’s report scrutinized data from some of the country’s largest banks, which provided the consumer bureau with information about their overdraft programs and accounts during 2010 and 2011.

Account holders who chose to opt in to overdraft coverage paid an average of $196 in fees in 2011, the report found. In contrast, the average fees for consumers who didn’t opt in were $28.

Bureau officials noted that consumers who overdraft frequently are more likely to consent to overdraft coverage, but even among heavy overdrafters - those who had 10 or more overdrafts during the first half of 2010 - less than half opted in. Account holders who did opt in were more than 2.5 times more likely to have banks close their accounts because of unpaid negative balances, according to the report. Such involuntary closures can make it harder for a consumer to open another account.

1
Text Only
World, nation, state
  • Potential for heart attack, stroke risk seen with marijuana use

    Over a five-year period, a government-mandated tracking system in France showed that physicians in that country treated 1,979 patients for serious health problems associated with the use of marijuana, and nearly 2 percent of those encounters were with patients suffering from cardiovascular problems, including heart attack, cardiac arrhythmia and stroke, and circulation problems in the arms and legs. In roughly a quarter of those cases, the study found, the patient died.

    April 24, 2014

  • Cleveland women held captive seek Joan Rivers’ apology

    Attorneys for two women held in a Cleveland home and abused for a decade say Joan Rivers should apologize for comparing living in her daughter’s guest room with the captivity they experienced.

    April 24, 2014

  • Fracking foes challenge earthquake assurances

    A citizens group said Wednesday it isn’t taking the word of state regulators that new permitting guidelines will protect public health after earthquakes in northeast Ohio were linked to the gas drilling method of hydraulic fracturing, or fracking.
     

    April 24, 2014

  • U.S. weighs clemency for inmates jailed 10 years

    The Obama administration is encouraging many nonviolent federal prisoners to apply for early release — and expecting thousands to take up the offer. It’s an effort to deal with high costs and overcrowding in prisons, and also a matter of fairness, the government says.
     

    April 24, 2014

  • Lower-income teens don’t get enough sleep

    African-American high school students and boys in low- to middle-income families reported short, fragmented sleep, and that could play a role in their health risks, researchers reported Monday.
     

    April 23, 2014

  • Health agencies try to counter mumps outbreak

    Health agencies trying to stem a large and growing mumps outbreak are advising college, school and even day care leaders to make sure central Ohio students are immunized and to separate them from those who haven’t been vaccinated and those who are infected.
     

    April 23, 2014

  • An ocean of broken hearts

    Lee Byung-soo says he knew, when he saw his 15-year-old son’s body in the tent. It could not have been more horrifically obvious. But he wanted so much for him to be alive.

    April 22, 2014

  • Biden conferring with Ukranian leader over what to do
    U.S. Vice President Joe Biden arrived in Kiev on Monday for talks with Ukraine’s embattled interim leaders as Russia’s top diplomat blamed Washington for instigating the crisis that threatens to escalate into armed conflict between the two former Soviet republics.
     

    April 22, 2014

  • Panel’s role in Cleveland police ruling questioned

    A lawyer for families of men killed in separate 2012 shootings by Cleveland police — including a 137-bullet chase under federal investigation — is questioning a grand jury’s role in a recent county prosecutor’s ruling.

    April 21, 2014

  • Gender gap under Ohio governor nearly $10 an hour

    A newspaper investigation has found the average pay gap between men and women in the offices of four of Ohio’s five elected statewide officials has grown to as much as almost $10 an hour, as it’s shrunk to under a dollar across the rest of state government.

    April 21, 2014

House Ads
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
AP Video