Bank customers value overdraft protection policies, and banks have responded by offering transparent, opt-in programs to help customers manage their payments, ABA said this week in a comment letter to the CFPB.
ABA added that the existing regulatory structure for overdraft protection is a “strong, pro-consumer baseline that empowers consumers to make informed and responsible account management choices.” Further limiting overdraft protection would drive up costs for all bank customers, potentially reversing a trend of “the democratization of deposit account access,” ABA said.
The letter noted that customers value overdraft protection because it protects their reputations with merchants and provides a backup for important transactions. It also noted that more than 90% of customers in multiple surveys have said they were willing to pay for overdraft protection.
ABA urged the CFPB to survey actual overdraft protection users, rather than consumer advocate groups, to understand consumer preferences and learn more about the demographic profiles of overdraft protection users. ABA also called for tests of how account tracking or marketing strategies affect overdrawing and overdraft protection enrollment.
In addition to its letter, ABA released a white paper explaining how overdraft protection programs protect consumer choice.
Read the letter.
Read ABA’s white paper.
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