Your Bank's Dirty Secret

Picture this. You're having a bad day. You had a dental appointment that you had to pay too much for. There's a lot of traffic on the way home, and you realize there's nothing in the fridge for you and your family for dinner. So you stop by the grocery store, you know, just to grab something. It's not payday until tomorrow, so you grab just a few simple things, ring them up on your debit card. After paying for them, you think, Oh wait, let me double check my bank account. You open your phone and poof, you find you are in the negative by just a few bucks and you just got hit with a $35 fee. Yeah, your payday just got a lot worse. So why did you just get charged $35 and what is it for? An overdraft fee is a charge from a bank when a purchase or withdrawal makes your account drop below zero. So in addition to owing the negative balance, the amount below zero, you get charged the overdraft fee as a penalty. It's $10 at Bank of America, $20 at Navy Federal, $34 at Chase, and $35 at Wells Fargo. So who pays the bulk of these fees? It's the same small group of Americans who are already struggling to make ends meet. According to data from the Consumer Financial Protection Bureau, just 9% of checking account holders pay almost 80% of all overdraft fees. Wow. These fees add up. On average, these Americans are paying $380 a year in overdraft fees. That's $380 they could have spent on groceries or health care or rent, and instead it's going straight into the big banks. These fees are disproportionately paid by low-income Americans, and they hit Black and Hispanic communities the hardest. And look, to be honest, they're just another way that the banks prey on Americans who are struggling the most. It's a money grab, plain and simple. Now, if it sounds to you like something should be done about this, You're right. And almost two years ago, just before Donald Trump was sworn into office, the Consumer Financial Protection Bureau finalized a rule that would have capped most of these overdraft fees at just five bucks. The rule only applied to the very biggest banks. And it even had a caveat in it that said if these big banks could prove that overdrafts cost them more than five dollars to process, as they could charge a slightly higher fee to recoup their losses. Seems pretty fair to me. And before anyone says that banks rely on these fees to keep going, stop right there. While overdraft fees are a real financial hit for the small group of Americans who pay them the most, these fees represent a pretty small share of bank profits, at least for the giants. Take, for example, JPMorgan Chase, which collects more revenue in overdraft fees than any other bank in America. Last year, Chase received about $1.1 billion in these fees while they earned over $182 billion in total revenue. When you do the math, that's just over six-tenths of 1% of Chase's revenue. 0.6%. Not even pennies on the dollar for a company with literally trillions of dollars in total assets. And here's the real kicker. Some big banks like Capital One and Citibank have totally eliminated overdraft fees in recent years. Did they go bankrupt? Did they fold? No, they're still pulling in record profits. They're doing just fine. Capping overdraft fees just makes the system a little more fair for everyone. After all, $35 is good money. It's seven rotisserie chickens at Costco. It's more than two hours of work at a minimum wage job in Massachusetts. But Donald Trump and the Republicans, they don't care about what's fair. They just care about their big donors and their buddies on Wall Street. Once Trump took office, Republicans in Congress voted to get rid of the CFPB's five dollar cap on overdraft fees and President Trump signed it into law. The rule would have saved Americans approximately five billion dollars. That's billion with a B every single year. But instead, Americans who are already struggling to pay everyday costs in Trump's economy, they're getting charged. So the next time you get hit with $20 or a $30 overdraft fee after going to the grocery store, you can thank Donald Trump and the Republicans.