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Overdraft Loans: Our Policy Positions

CRL recommends t he Consumer Financial Protection Bureau end overdraft abuses, as follows:

  • Rein in excessive fees by requiring that overdraft fees be reasonable and proportional to the cost to the institution of covering the overdraft.
  • Stop the snowball effect overdraft fees often cause by (1) limiting fees to one per negative balance episode, allowing the customer to bring the account to positive before incurring additional fees; (2) prohibit “extended” or “sustained” overdraft fees charged when the account is not returned to positive quickly; and (3) prohibit manipulation of transaction posting order that increases fees.
  • Regulate non-occasional, frequent overdrafts as credit, meaning that it should only be extended based on a determination that the customer has the ability to repay it, and it should be repayable in manageable installments.

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