Hailey Johnson
During the coronavirus pandemic, many people lost their source of income and struggled with depleting funds in their accounts. To prevent customers from paying overdraft fees, two senators, Cory Booker and Sherrod Brown, sent letters to 15 US banks urging them to waive these fees. Banks such as Ally, Bank of America, Santander Bank, BBVA, First National Bank, MidFirst Bank, and Associated Bank waived various fees during the pandemic. However, some banks required customers to call and request this assistance. While some banks were lenient with refunding fees, others continued to charge overdraft fees.
| Characteristics | Values |
|---|---|
| Banks charging overdraft fees during the pandemic | Some banks are still charging overdraft fees during the pandemic. |
| Banks waiving overdraft fees during the pandemic | Ally Bank, Bank of America, Santander Bank, First National Bank, MidFirst Bank, Associated Bank, Citizens Bank, Huntington National Bank, Regions Bank, Synchrony, BBVA, KeyBank, and others. |
| Legislation to ban overdraft fees | A bill was introduced by House Democrats to ban banks from charging overdraft fees during the pandemic. |
| Senators' requests to waive overdraft fees | Senators Cory Booker and Sherrod Brown sent letters to 15 banks requesting them to waive overdraft fees. |
| Impact of overdraft fees | Overdraft fees can compound quickly and are one of the most complained-about bank fees. |
| Customer complaints | There were roughly 1,600 customer complaints about overdraft policies tied to checking accounts in 2019. |
| Average overdraft fee | The average overdraft fee is $35, but credit unions typically charge around $26. |
| Continuous overdraft fees | 58% of banks charge continuous overdraft fees on accounts that are overdrawn for several days. |
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What You'll Learn
Lawmakers urge banks to stop charging overdraft fees
During the coronavirus pandemic, millions of Americans found themselves without a steady income. As a result, many were unable to avoid incurring overdraft fees or non-sufficient funds fees. In light of this, lawmakers urged banks to stop charging overdraft fees.
Senators Cory Booker and Sherrod Brown sent letters to 15 financial institutions, requesting them to refrain from charging overdraft and non-sufficient fund fees during the pandemic. These banks were chosen because they earned the most in overdraft fees or had assets of over $2 billion, allowing them to reap the highest income from overdraft fees. In their letter, the senators wrote:
> We are writing to urge [you] to take steps to relieve consumers from burdensome practices as they face financial constraints related to the COVID-19 pandemic. In particular, we urge you to cease charging overdraft and non-sufficient funds fees during this time. Reasonably priced overdraft lines of credit are a far better and more fair alternative, especially during a time of financial crisis.
Some banks, including Ally, Bank of America, and Santander Bank, waived overdraft fees during the pandemic. However, some banks required customers to call and request this assistance. While overdraft fees may seem insignificant, they can quickly compound, with financial companies earning $34.6 billion in revenue from overdraft fees in 2019 alone.
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Banks that waived overdraft fees during the pandemic
During the coronavirus pandemic, many Americans found themselves without a steady income. In light of this, two senators, Cory Booker and Sherrod Brown, wrote letters to banks urging them to waive overdraft fees. These banks were chosen because they earned the most in overdraft fees or had assets of over $2 billion. While some banks continued to charge overdraft fees, others waived them during the pandemic.
Ally Bank, for example, automatically waived overdraft fees for its customers. Bank of America and Santander Bank also announced that they would waive overdraft fees, although customers had to call to request this assistance. Discover Bank offers a checking account without overdraft fees, and Key Bank offers a Hassle-Free Account without monthly or overdraft fees. JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup promised not to use account holders' stimulus relief checks toward bank overdraft fees.
Some banks implemented more forgiving policies when it came to refunds if the charges were a result of the impacts of COVID-19. For instance, Navy Federal Credit Union was found to have charged "authorised positive overdraft fees" between 2017 and 2022 but later stopped the practice and refunded customers.
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Overdraft fees: how they work
During the coronavirus pandemic, lawmakers and senators asked banks to stop charging overdraft fees. Banks such as Ally, Bank of America, and Santander Bank waived overdraft fees, but some banks required customers to request this assistance.
Overdraft fees are one of the most expensive fees banks charge, but not all banks charge the same amount, and some don't charge overdraft fees at all. Overdraft fees can be expensive, with some ranging from $30 to $35 per transaction. These fees can add up quickly and have costly ripple effects. Some banks also charge continuous overdraft fees, or daily overdraft fees, which are assessed every day an account remains overdrawn.
If you're charged an overdraft fee, there are a few ways to get it waived. If you don't have a history of negative transactions, you can contact your bank's customer service department and ask if they will waive the fee. Some institutions have fee forgiveness programs for customers in good standing. Additionally, if you have an electronic deposit scheduled that would cover the overdrawn transaction, some providers will waive the fee if the deposit arrives by the next morning.
To avoid overdraft fees, you can shop around for a different bank account. Some banks offer checking accounts without monthly or overdraft fees. You can also opt out of overdraft protection for recurring payments such as streaming services and health club fees.
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Senators ask banks to waive overdraft fees
During the coronavirus pandemic, Senators Cory Booker and Sherrod Brown led the charge in asking banks to waive overdraft fees. In April 2020, the senators sent letters to 15 financial institutions, requesting that they refrain from charging overdraft and non-sufficient fund fees. This came at a time when millions of Americans were out of work and facing financial hardship.
The banks were chosen because they were among the top earners in overdraft fees, with some collecting over $2 billion in revenue from these charges. Overdraft fees can range from $30 to $35 on average, and these fees can add up quickly, especially for those without a steady income. The senators understood that even with careful budgeting, many Americans could still struggle to avoid these fees.
Some banks, including Ally, Bank of America, JPMorgan Chase, Wells Fargo, and Santander Bank, heeded the call and announced that they would waive overdraft fees during the pandemic. However, some banks required customers to proactively request this assistance.
Despite these efforts, the Senate later voted to lift the cap on bank overdraft fees, overturning a Consumer Financial Protection Bureau (CFPB) ruling aimed at limiting these charges. This decision was met with criticism from consumer advocacy groups, who argued that it prioritized bank profits over supporting low-income families.
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Bills to ban overdraft fees during the pandemic
During the coronavirus pandemic, many people found themselves without a steady income, and some struggled to avoid incurring overdraft fees. An overdraft fee is incurred when a checking account is overdrawn as a result of a debit card transaction. Instead of the card being declined, the bank covers the difference between what the account holder had in the account and the amount of the intended purchase. The bank then charges the account holder a fee for this service. These fees can add up quickly, with banks charging $30 to $35 per overdraft.
In 2020, two Democratic senators, Cory Booker and Sherrod Brown, sent letters to 15 of the top US banks urging them to stop charging overdraft fees during the pandemic. These banks were chosen because they earned the most from overdraft fees. The senators understood that millions of Americans had lost their source of income and wanted to prevent them from paying unnecessary bank fees. The banks did not immediately respond to these requests.
In the same year, House Democrats introduced a bill that would ban banks from charging overdraft fees during the pandemic. The bill would also stop banks from reporting overdrafts to credit reporting agencies and instruct banks to "extend a reasonable overdraft line of credit to consumers with insufficient funds." This legislation aimed to keep money in the pockets of Americans who were struggling financially.
Some banks, including Ally, Bank of America, and Santander Bank, announced that they would waive overdraft fees during the pandemic. However, some banks required customers to call and request this assistance. While other banks, like TD Bank, continued to charge overdraft fees, they implemented more forgiving policies when it came to refunds if the charges were a result of the impacts of COVID-19.
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Frequently asked questions
Yes, banks are still charging overdraft fees during the coronavirus pandemic. However, some banks are offering more lenient refund policies.
In 2020, Senators Cory Booker and Sherrod Brown sent letters to 15 banks urging them to stop charging overdraft fees. These banks included Ameris Bank, Bank of America, BankPlus, Citi, HSBC, JPMorgan Chase, Ocean Bank, PNC Bank, Regions Bank, TD Bank, Truist Bank (BB&T and SunTrust), U.S. Bank, Wells Fargo and Woodforest National Bank.
Some banks are waiving overdraft fees during the coronavirus pandemic, including Ally, Bank of America, Santander Bank, BBVA, First National Bank, MidFirst Bank, Associated Bank, Citizens Bank, Huntington National Bank, and Regions Bank.
If you are charged an overdraft fee, you can try calling your bank and explaining the situation. Many banks are being more lenient with refunds during the pandemic. Additionally, attorneys at Top Class Actions are investigating improper overdraft fees charged during this time.
