Understanding Overdraft Fees

The video discusses overdraft fees, which are charges incurred when a bank covers a transaction that exceeds the account balance. The CFPB mandates that banks cannot charge these fees without customer consent. Despite this, some banks engage in deceptive practices to enroll customers in overdraft protection. Overdraft fees are lucrative for banks, generating billions in profits. To avoid these fees, customers can opt out of overdraft coverage, monitor their accounts, and choose banks that do not charge such fees.

What percentage of Americans with checking accounts pay overdraft fees?

• One out of every two

• One out of every three

• One out of every five

• One out of every four

What happens if you try to make a purchase without enough money in your account?

• The transaction is always declined

• The bank automatically covers it without fees

• The bank may lend you the money

• You receive a warning message

What must banks do before charging overdraft fees?

• Get customer permission

• Automatically enroll customers

• Charge a flat rate

• Send a monthly statement

What unethical practice did some banks engage in regarding overdraft fees?

• Offering free overdraft protection

• Providing overdraft insurance

• Automatically opting customers in

• Reducing fees without notice

How much did a major bank pay in penalties for illegal overdraft practices in 2020?

• $50 million

• $122 million

• $100 million

• $200 million

How much profit did banks make from overdraft fees in 2019?

• $15 billion

• $8 billion

• $5 billion

• $11 billion

What is the average cost of an overdraft fee?

• $20

• $35

• $25

• $30

What is one way to avoid overdraft fees?

• Monitor your account balance

• Ignore bank alerts

• Opt into overdraft protection

• Use only credit cards

What should you consider when opening a new bank account to avoid overdraft fees?

• Pick a bank with many branches

• Select a bank with no overdraft fees

• Opt for a bank with a large ATM network

• Choose a bank with high interest rates

What tool can help you keep track of your account balance to avoid overdraft fees?

• Mobile banking apps

• Monthly paper statements

• ATM receipts

• Bank newsletters