Australian Banks Lead the Way on Overdraft Issues

The outrageous fees that banks charge for their overdraft “protection” loans are back in the news.  A front-page article in Wednesday’s New York Times provided an excellent in-depth expose of this exploitative practice that extracts $38 billion per year from consumers.   One interesting tidbit was the claim by a bank lobbyist that the proposed Consumer Overdraft Protection Fair Practices Act, sponsored by Rep. Carolyn Maloney, would cause up to 2,000 banks and credit unions to fail within two years – “because 45% of the nation’s banks and credit unions collect more from overdraft services [sic] than they make in profits.”

One day later, our friends at the Consumer Law and Policy blog reported that:

Banks in Australia are eliminating over-draft fees, after a proposed law limiting the charge to a “reasonable fee.” Similar to the US, Australian banks had been charging $30-35, for a service estimated to cost $1 or less.

Click here to read about the decision of National Australia Bank to drop its overdraft fees.   For our previous blogs on overdraft protection fees, start here.   And click here to view the trailer for Overdrawn!, Karney Hatch’s fine documentary on the subject, inspired by his own experiences with Wells Fargo Bank.

(Photo: jonnyr1)