OPINION: What if Overdrafts Are Eliminated?

Courtesy of Moebs $ervices, moebs.com

The result would be:

• 678.2 Million debit cards purchases of gas, groceries, dentist, etc., would be declined.
• 60 Million Americans’ ACH payments returned NSF for cell phones, auto loans, mortgages, etc.
• $33.4 Billion of overdraft revenue would not be charged to the consumer.
• 111,000 financial institution employees would lose their jobs.

This is what the Consumer Financial Protection Bureau, not Congress, is considering doing. The CFPB reports to the President of the United States, not Congress.

What follows is Moebs $ervices’ Study on The Evolution of Overdrafts done in two parts.

• This is Part I – the History of Overdrafts.
• Part II – the Overdraft Solution is subsequently provided in the next issue.
  (If you would like a copy of the full study now, email [email protected]).

The Evolution of Overdrafts
Study by Moebs $ervices, Inc. ©2022

Consumers make financial mistakes. Most are just ordinary errors while some are intentional and even fraudulent. Checking accounts, or transaction accounts, as the rest of the world calls them, suffer the brunt of these errors. The leading cause of these mistakes, or 77.4% of all service charges on deposits, are overdrafts.

These facts come from an extensive Overdraft Study by Moebs $ervices, an economic research firm.

An overdraft is defined as a credit, but not a loan by the Federal Reserve and other regulators. An overdraft is when a transaction account has a debit balance, or withdrawals (debits) mainly debit cards, exceed deposits (credits) mainly direct deposits of payroll or ACH credits.

Click here to read the full article

Related reading: Summary in CUToday.info “One Forecast: ‘Half of CUs Could Close”