Bank payday and overdraft abuses trap people in cycles of high-cost debt, saddling them with triple-digit interest rates and draining their checking accounts through unfair fees.
The Office of the Comptroller of the Currency (OCC) has proposed new guidance for the banks it regulates on overdraft programs and “deposit-advance products,” which are bank payday loans. These practices are clearly abusive. The OCC is accepting public comment on their proposed guidance until August 8, 2011.
Overdraft abuses include:
• $35 fees for small dollar debit overdrafts,
• multiple $35 fees for one instance of a customer’s bank account being overdrawn, and
• the reordering a customer’s daily transactions to empty their account faster and thus charge additional fees.
Bank payday loans have inherently abusive features that include:
• triple or quadruple-digit APRs, and
• short-term due dates that create a cycle of debt.
Subject: Docket ID OCC 2011-0012 Guidance on Deposit-Related Consumer Credit Products
To Comptroller John Walsh, Please strengthen the guidance the OCC has proposed on bank overdraft and bank payday loans. Overdraft abuses and payday loan debt traps cost Americans dearly in unfair fees. The OCC should: *Prohibit bank payday loans, *Tell banks to stop charging overdraft fees on debit card transactions which could easily be declined for no fee when the customer lacks sufficient funds, *Prohibit steering customers into high-cost products when they qualify for much cheaper credit, and *Encourage responsible small loans that do not trap customers in a cycle of high-cost debt. Americans rely on effective oversight of bank practices for their financial stability. In this economy, strong oversight is needed more than ever. Sincerely, [Your Name] [Your Address] [City, State ZIP]