View or download a PDF of the letter here.

March 30, 2022 

House Financial Services Committee
2129 Rayburn House Office Building
Washington, DC 20515 

Dear Member of House Financial Services Committee: 

Thank you for holding this important hearing on the movement to eliminate overdraft fees. These fees can be devastating for many households, especially for those who can least afford them, as they create a cycle of compounding fees and debt that can push consumers out of the banking system and into financial insecurity. While we are encouraged by some movement in the marketplace to eliminate these fees, we cannot rely on the benevolence of a few financial institutions to make up for the lack of common-sense regulations which would protect all consumers. 

The 66 undersigned organizations urge the members of this committee to support Rep. Carolyn Maloney’s Overdraft Protection Act of 2021 

Overdraft-related fees cost consumers $15 billion each year. By far, the most expensive way to have an overdraft covered is through an overdraft coverage fee. Financial institutions could offer and encourage their customers to choose lower cost overdraft coverage but instead they push extremely high-cost, punitive programs that disproportionately impact their most vulnerable customers. 

Overdraft fees are often triggered by small debit card transactions that average about $20, which could easily be declined for no fee when the account lacks sufficient funds. Instead, banks and credit unions pay these transactions and charge a fee averaging $34, for the nation’s largest banks. All too often, charging overdraft fees on debit cards unnecessarily forces low-income families into a cycle of compounding fees that can make it only more difficult to make ends meet. 

Research shows that overdraft fees have a particularly devastating effect on lower-income consumers and communities of color. At a time when families face great financial insecurity because of the ongoing COVIT-19 pandemic and high levels of inflation, we are obligated to do all that we can to protect these financial assets from further abuse.

The Overdraft Protection Act of 2021 would address the most abusive provisions of today’s typical overdraft coverage by establishing the following key reforms, among others: 

• requiring that all overdraft fees be “reasonable and proportional” to the cost to the institution of processing the transaction; 
• limiting the number of overdraft fees institutions can charge to one per month and six per year; beyond that, additional overdrafts could be covered by an overdraft line of credit or by a transfer from another account. 
• prohibiting institutions from charging an overdraft coverage fee on any transaction that results from a debit hold placed on an account that exceeds the actual dollar value of the transaction; 
• prohibiting institutions from reordering transactions to maximize fees. 

For these reasons, we enthusiastically support the Overdraft Protection Act of 2021 and urge your office to do the same. 

Sincerely, 

Americans for Financial Reform 

20/20 Vision 

AFL-CIO 

Alaska PIRG 

Alaska Public Interest Research Group (AkPIRG) 

Arkansans Against Abusive Payday Lending 

Bank On Boston Coalition 

California Reinvestment Coalition 

Center for LGBTQ Economic Advancement & Research (CLEAR) 

Center for Reparatory Justice Transformation and Remediation 

Center for Responsible Lending 

Coalition on Human Needs 

Communications Workers of America (CWA) 

Consumer Action 

Consumer Federation of America 

Consumer Federation of California 

Consumer Reports 

Consumers for Auto Reliability and Safety 

Florida Consumer Action Network 

Georgia Watch 

Gray pather 

ICNA Council for Social Justice 

International Union, UAW

Kentucky Resources Council, Inc. 

Local Initiatives Support Corporation (LISC) 

Madison-area Urban Ministry 

Maryland Consumer Rights Coalition 

Miami Valley Fair Housing Center, Inc. 

Michigan League for Public Policy 

Mission Asset Fund 

NAACP 

National Association of Consumer Advocates 

National Community Reinvestment Coalition (NCRC) National Consumer Law Center (on behalf of its low-income clients) National LGBTQ Task Force Action Fund 

National NeighborWorks Association 

National Resource Center on Domestic Violence 

NC Coalition for Responsible Lending 

NETWORK Lobby for Catholic Social Justice 

New Home Development 

Partners In Community Building, Inc. 

PathWays PA 

Pennsylvania Council of Churches 

Progressive Leadership Alliance of Nevada 

Public Citizen 

Public Justice Center 

Public Law Center 

Reinvestment Partners 

Renaissance Entrepreneurship Center 

SaverLife 

SC Appleseed Legal Justice Center 

Tennessee Citizen Action 

Texas Appleseed 

The Collaborative 

The Leadership Conference on Civil and Human Rights THE ONE LESS FOUNDATION 

Tzedek DC 

U.S. PIRG 

UnidosUS 

United Way of Southern Cameron County 

Virginia Organizing 

Virginia Poverty Law Center 

VOICE – OKC 

West Virginia Center on Budget and Policy 

Woodstock Institute 

WV Citizen Action Group