CFPB Study Reveals Consumer Frustration Regarding Overdraft Policies

The CFPB has released a study showing some consumers are frustrated and confused by overdraft policies. Learn more.

David Baumann


May 23



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David Baumann

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David Baumann

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Findings based on interviews and focus groups conducted by bureau.

People are frustrated with overdraft fee levels, are concerned about payment timing and balance information, and believe they have little control when they have a negative balance in their account, the CFPB said, in summing up interviews and focus groups the agency conducted on the subject.

The bureau held 14 individual interviews with low- and moderate-income people during the summer of 2022 in addition to speaking with 22 people in four focus groups. The agency cautioned that it was a “small-scale engagement with a non-representative sample of consumers,” but added that the session provided a useful snapshot of consumer experiences.

Backstory and Context 

The CFPB released a study based on those interviews late last week as the agency continues to examine overdraft programs, with an eye on deciding whether regulations are needed. The Biden Administration has lumped overdraft fees into the group of “junk fees” that administration officials want better controlled

The interviews and focus groups were held to assist CFPB officials in deciding what to do next. 

Inside the Results

Many people said they were confused about overdraft coverage, while others recall choosing the coverage.

“Some found overdraft coverage to be valuable, while many consumers expressed concerns about overdraft fees and practices, and the financial hardships they faced as a result,” the study states. “Despite the evolving nature of this market, consumers had limited awareness of alternative deposit accounts that either lacked overdraft fees or did not have the possibility of overdraft at all.”

Additionally, the CFPB reported that:

–Most interview participants said overdraft fees are excessive, and some could not understand how fees are determined. Some also suggested the fees could be lowered while still acting as a deterrent or could be graduated, depending on the size of the transaction.

–Most interview participants said they were not aware of their financial institution’s overdraft policy when they opened their account, nor did they choose an account based on its overdraft coverage.

–People interviewed had “mixed views” about what overdraft protection is, with some correctly saying it allowed them to spend more than what is in their account, while others said it was a setting to decline payments that would overdraw their accounts.

–Focus group members were divided about whether transactions that led to an overdraft fee should go through or not, with some preferring that their financial institution decline transactions instead of charging an overdraft fee.

–Focus group participants and people interviewed were unaware of second-chance accounts offered by financial institutions to people with a negative banking history.

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