The Beginning of the End for Overdraft Fees

Key Regulator Signals Path to Reform

At a speech to the Consumer Federation of America this week, acting Comptroller of the Treasury Michael Hsu outlined some key reforms his agency sees as necessary when it comes to banking — particularly around overdraft fees.

The speech comes as Capital One announced an end to the practice of collecting overdraft fees. Additionally, as American Banker reports, JPMorgan Chase is making some key changes to its overdraft fee policies:

JPMorgan Chase announced a pair of changes that figure to impact its overdraft-fee revenue. Starting next year, the largest U.S. bank by assets will give customers an extra business day to avoid overdraft fees and will make direct-deposited payroll funds available up to two business days early.

Hsu named several key reforms he sees as necessary in the area of overdrafts:

The list includes: providing a grace period before charging an overdraft fee; allowing negative balances without triggering fees; offering balance-related alerts; and providing real-time balance information.

While some of these reforms are in place at some banks, they are not yet industry-wide. Hsu’s remarks come following an indication by the Consumer Financial Protection Bureau (CFPB) that additional regulation around overdraft fees is in the pipeline.

“Rather than competing on quality service and attractive interest rates, many…