Bank Customers Denied the Chance to Avoid Unwanted Fees, CRL Survey Finds

WASHINGTON, April 16 /PRNewswire-USNewswire/ -- Don't approve my $5 debit card purchase only to charge me a $34 fee, consumers would say to their banks given the chance, according to a new survey by the Center for Responsible Lending.

Not surprisingly, the overwhelming majority of survey respondents prefer that their bank or credit union deny debit card purchases that are not covered by the funds in their checking account, whether their purchase is for $5, $20 or $40. The prevailing banking practice, though, is to automatically approve those transactions and charge the fee, a system which ends up costing Americans $17.5 billion per year.

More consumers are enrolled in the most expensive option than any other option for covering overdrafts, the survey also found. And nine of ten respondents want the option to choose whether or not their checking account includes a feature that covers overdrafts for a fee around $34 -- a choice they're not always getting.

"The banks claim that their customers want debit card purchases to be approved even when they're not covered," said Leslie Parrish, senior researcher for the Center for Responsible Lending. "But what our survey found is that they want the chance to avoid these high fees, especially those who have been stung by them in the past."

"These fees can be nearly impossible to avoid," said Parrish. "The fact is, the banks are artificially increasing overdrafts by automatically approving them and by manipulating their check-clearing processes."

For example, if banks subtract the largest debit first from a daily batch of transactions, an overdrawn account holder may be charged more overdraft fees than if they are subtracted in the order in which the debits are made.

"It's a lopsided system. Consumers pay more in fees than the banks front to cover overdrafts," said Parrish.

Find the full report and CRL's previous overdraft research at http://www.responsiblelending.org.

The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help (http://www.self-help.org/), one of the nation's largest community development financial institutions.