The Biden Administration is ‘cracking down’ on banks by imposing a $5 cap on overdraft fees, calling them ‘junk fees’
The Biden Administration is ‘cracking down’ on banks by imposing a $5 cap on overdraft fees, calling them ‘junk fees’
The banks are vowing to fight the decision.
Summary
The Biden Administration, through the Consumer Financial Protection Bureau (CFPB), is capping overdraft fees at $5, down from $35, starting Oct. 1, 2025.
The move, targeting “junk fees,” could save U.S. consumers $5 billion annually.
The CFPB suggests banks adopt cost-based fees or offer overdraft credit lines while disclosing interest rates.
Industry groups oppose the rule, and its future is uncertain under a Republican-controlled Congress and the incoming Trump administration.
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If they are truly junk fees then the cap should be $0.
$0 would probably mean there's no way it sticks.
If the fee is zero, the bank will just stop giving people over deaft which is how it should work anyway.
Only time I over drafted is because of a mistake.
But people also use overdraft as payday loan and these fees target them. So bank will need some fee to enable these "loans"
Why do we need to prevent payday loans in this manner? seems like the best way to have them. just put an upper bound and a interest rate on negative balances over a month old. you know... just like how a credit card works.
Because banks don't want this viewed as payday loans and the regulations it would attract.
They are punishing bad behavior is better justification for the extraction operation.
what are credit cards if not payday loans. and you didnt touch on anything relevant to my point. no one should gives a shit what banks think. its about whats good for the community.
you were asserting that the fees are to prevent people from using them as pay day loans. but banks already have that system its a credit card. why not just have over drafts tie into the credit card system and avoid this whole set of nonsense.
Credit cards have zero interest if I pay off the balance in full each month. That is not an option for payday loans.
Yes, thats why low limit credit cards are a better model than payday loans and was my point for both payday loans and overdraft fees.
People who need pay day loans can't get from credit cards... That's kinda the entire business model here
yes, I'm not talking about how it currently works. I'm giving you a thought experiment to reason through. things you should be asking yourself:
- what are the purpose of credit cards? what are the purpose of pay day loans?
- why do we restrict people from having credit cards? what purpose does it serve?
- why is having high interest rate payday loans for the people we prevent from having low limit credit cards in any universe a reasonable or justifiable concept.
- overdraft fees in no way help anyone, not even the banks it just makes them adversarial.
I'm asserting that a low limit credit card is functionality better for everyone than allowing predatory pay day loan services or overdraft fees to exist. both models fundamentally work the same way you spend money that isnt yours and pay it back later at an exorbitant fee if longer than X.
Banks refuse to providing credits to poor people who need pay day loan. This is the current market condition
This is how progress dies, by half assing everything and blaming it on speculation that it couldn't work if done right.
I'm 50/50 on that. I agree, but it's more complicated in action than just saying "the fee is now zero." This isn't the first time Biden has tried to get rid of overdraft fees. Courts strike it down.
Courts struck down the
antiabortionforced birth legislation for decades until repeatedly failing finally worked out for the religious cultists.Real change doesn't happen through compromise.
Real change doesn’t happen through compromise.
I get the strong feeling You've never had to negotiate anything important in your life. Idealism is not reality. It's fun to daydream about though.
"Alwaya start negotiations with your final offer."
-you
Point proven.
certainly. nothing happens gradually its always super sudden. half a loaf sucks so bad to. waaayyyy better to have no loaf. at least with no loaf you can imagine how nice the whole loaf will be without that pesky half a loaf bringing you back to reality. Man I am so happy to have 4 years of no loaf and I hope no one ruins it with a bunch of half a loaves 4 years from now. /s
That isn't progress though, that is just surviving. It is understandable, but it is important to understand that it is not progress.
not surviving is not going to make progress but progress can be made while one survives. You don't need to not get the loaf to still go for the full loaf but it will be easier to start from a base of half a loaf and try to get more. Its the folks who want many loaves who want to convince other folks that none is better than half.
it will be easier to start from a base of half a loaf and try to get more.
In reality the people who just want to survive will accept the half loaf and progress stagnates.
do you expect that starving them will get them to do something that will cause progress? Won't progress suffering even more with the full loaf? Don't you see at all who actually wins in the no loaf scenario because not everyone has no loaf or half a loaf at any time. Personally from my experience there is no need to prime folks greed. I find 99% of people will always go for more and the few that don't are generally better when they can be that way than forced to pretend they are making progress. Its one reason I am a big universal income proponent. There is the myth that everyone will sit on their ass and do nothing but in actuality only a very very small percent of folks will do that and those folks likely cause more harm than good when forced to participate.
I'm not saying to starve them. I'm saying to push for the whole thing constantly which will probably end up with a half loaf of bread when barriers are thrown up, but there is an actual chance of getting the whole loaf in a reasonable period of time instead of proposing the half loaf and ending up with a quarter loaf for another century.
Oh thats fine. There seems to be a lot of stuff thats like this sucks, whats the point, it should be better, we should not even be supporting this because better. Certainly we should push for it but its understandable someone in a leadership position will try to get what they view as winnable and then progress to the next step as opposed to going for the whole thing when the end result will be nothing or worse regression. If we regress all of a sudden getting the whole loaf is still behind where we were.
I like how they put “cracking down” in quotes.