We may (finally) be seeing the end of overdraft fees - The Hustle
The Hustle

We may (finally) be seeing the end of overdraft fees

Capital One is the biggest bank to eliminate overdraft fees, which make the company $150m annually.

The overdraft fee.

It’s the bane of our existence.

While we hate it, US banks feast on the charge: The industry made an eye-watering $14B+ on overdraft in 2019 [insert unprintable words].

The practice may be coming to an end

On Wednesday, Capital One announced it will eliminate overdraft, per CNBC. The bank — which charges customers $25-$35 for conducting transactions that exceed their balance — makes $150m a year on the hated fee.

With ~350 physical locations and 70k ATMs, Capital One is the biggest US bank to ax overdraft. Moving forward, it will:

Overdraft fees have long been a point of contention

Earlier this year, a group of Democrat senators sent a letter to JPMorgan demanding that the bank return $1.5B in overdraft fees it made during COVID. JPMorgan’s CEO Jamie Dimon said “no.”

In what is probably not a coincidence, the Consumer Financial Protection Bureau (CFPB) said on Wednesday that it’s increasing oversight of banks that rely on overdraft.

Capital One’s move…

… could signal an industrywide change.

There is precedent for this: In 2019, brokerages (TD Ameritrade, Charles Schwab, Interactive Brokers) all got rid of trading commissions in quick succession so as to stay competitive.

If history repeated itself, then [insert fist pound].

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