This makes Capital One, the sixth largest retail bank in the United States, the first top-ten bank to stop penalizing customers for withdrawing more money or writing checks for more money than they have in their account.
“The bank account is a cornerstone of a person̵[ads1]7;s financial life,” Capital One CEO Richard Fairbank said in a press release, adding that “overdraft protection is a valuable and convenient feature and can be an important safety net for families.”
Lawyers’ groups hope that other banks will follow Capital One’s management to eliminate these fees, which have been money makers for companies that demand them.
“This move from Capital One will have huge benefits for the most vulnerable consumers,” said Lauren Saunders, assistant director of the National Consumer Law Center, in Capital One’s release. “It is crucial that we continue to work to make the banking system more inclusive and fair to all.”
“Instead of competing for quality services and attractive interest rates, many banks have been hooked on overdraft facilities to feed their profit model,” CFPB director Rohit Chopra said in a press release. “We will take steps to restore meaningful competition to this market.”
A prominent analyst wrote that other banks may soon follow Capital One’s management – otherwise there is a risk that regulators will impose even tougher restrictions.
“Our expectation is that more banks will try to avoid CFPB enforcement actions,” Cowen Washington Research Groups Jaret Seiberg said in a report.
“Enforcement actions are likely to start next spring. Enforcement is the fastest way for the CFPB to try to change the behavior of the banking industry,” he added.
– CNN Business’ Jeanne Sahadi contributed to this report.