Capital One Bank announced that it has eliminated all overdraft fees and insufficient funds. It will also continue to allow customers to get free overdraft protection on their accounts.
This makes Capital One the sixth largest retail bank in the United States and the first in the top ten to stop penalizing customers for withdrawing more cash or writing checks with more money than they have in their accounts.
“A bank account is the cornerstone of an individual’s financial life,” said Richard Fairbank, CEO of Capital One, adding that “overdraft protection is a valuable and convenient feature and can be an important safety net for companies. families”.
Advocacy groups are hoping other banks will follow Capital One’s lead in eliminating these fees, which have been profitable for the companies that charge them.
“This Capital One move would have enormous benefits for the most vulnerable consumers,” says Lauren Saunders, associate director of the National Center. for Consumer Law. “It is vital to continue working to make the banking system more inclusive and fair for all,” he added.
Several lawmakers and regulators have criticized banks for punishing already commission-shorted clients with hefty overdraft fees, which generated billions of dollars in revenue for financial institutions. Capital One had more than $ 425 billion in assets in the third quarter and made a profit of $ 3.1 billion in the three months ended last September.
At the beginning of quest’year, Senator Elizabeth Warren criticized JPMorgan CEO Chase Jamie Dimon, referring to him as the “star of the show on the discoveries “.
In a recent statement, the Consumer Financial Protection Bureau said banks received nearly $ 15.5 billion in overdraft fees in 2019. It noted that over 40% of the fees generated by major banks were paid by 3 banks and US institutions.
“Instead of competing for quality services and attractive interest rates, many banks have become dependent on overdraft fees to fuel their profit model,” said Rohit Chopra, director of the Consumer Financial Protection Bureau. “We will take steps to restore targeted competition to this market,” he added.
An analyst senior wrote, however, that other banks may soon follow Capital One’s lead or that risk regulators impose stricter controls.
“We expected more banks would try to avoid CPA enforcement action,” said Jarrett Seiberg of the Queen Washington Research Group. in a recent report. “Executive action is likely to begin next spring. Implementation is the fastest way for the French central bank to try to change the behavior of the banking sector,” he added.
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