At the moment, just a small proportion of overdraft
customers account for a significant chunk of the profits banks make from unarranged overdrafts
Nine of the largest Arkansas-chartered banks collected more than $136 million in overdraft
fees in 2018, according to reports by the Federal Deposit Insurance Corp.
More than 50 per cent of banks' unarranged overdraft
fees came from just 1.5 per cent of customers in 2016.
Those who stray into an unarranged overdraft
will now pay less than 20p a day, instead of PS5, for a PS100 loan.
New rules have been announced that block banks from sneakily charging you extra on your overdraft
The FCA first proposed the reforms back in December, saying it wanted to make overdrafts
simpler, fairer and easier to manage.
Bailey told the committee unarranged overdrafts
tended to fall "much more heavily on the most vulnerable in society".
"It is clear to us that the way banks manage and charge for overdrafts
needed fundamental reform."
See the 0 per cent year as time to clear what you owe, as after that you're charged 50p a day (cheap for bigger overdrafts
, costly for smaller ones).
On average, overdraft
users are PS285 in the red each month for nine days, paying PS56.52 every year to their bank in fees and interest.
Senators Cory Booker (D-NJ) and Sherrod Brown (D-OH) have introduced legislation to crack down on exploitative overdraft
fees that banks charge consumers when they make a purchase or pay a bill but dont have sufficient funds in their account.
One recommendation to further transparency is to change the language of Regulation E's provision requiring the disclosure of alternative plans for covering overdrafts
from permissive to mandatory.