Capital One Eliminates Overdraft Fees

Advocates Call for All Banks to Follow Suit

Advocates at the National Consumer Law Center (NCLC) today applauded an announcement by Capital One that the bank will eliminate overdraft fees. NCLC further issued a call for other banks to follow suit and called on the Consumer Financial Protection Bureau (CFPB) to issue rules that would end overdraft fees.

“Capital One’s complete elimination of all overdraft and NSF fees is a game changer that should set the standard for the entire banking industry and encourage the CFPB to stop overdraft fees from being used as a high-cost form of credit that can reach or exceed the cost of triple-digit payday loans,” said Lauren Saunders, associate director of the National Consumer Law Center. “Capital One is the first top-10 bank, the first with a real branch network, and the first with significant overdraft revenue to make the hard choice to eliminate overdraft and NSF fees that harm the most vulnerable consumers and push them out of the banking system.”

Before COVID, Capital One collected about $150 million annually in overdraft fees. Larger banks collected even more: In 2020, JPMorgan Chase earned $1.5 billion in overdraft fees, Bank of America made $1.1 billion, and Wells Fargo collected $1.3 billion. Revenue from NSF fees is not specifically reported. Overall, banks collected nearly $12 billion in overdraft fees in 2019, according to a report by the Center for Responsible Lending.

“Overdraft and NSF fees…