TD adjusts overdraft fees in U.S. after scrutiny from consumer watchdog
CBC
TD Bank says it's making policy changes at its U.S. operations to reduce how much customers pay in overdraft fees amid rising regulatory pressure over the charges.
The bank says customers will be able to overdraw their account by up to $50 before incurring an overdraft fee, and for those who over draw by more, the bank will give them 24 hours to bring their account in line without charging a fee. It will also alert customers when their account balances are low.
The changes come as after criticism in December from the Consumer Financial Protection Bureau over how dependent U.S. banks are on overdraft and non-sufficient fund fees, noting banks pulled in $15.5 billion US from the fees in 2019.
"Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model," said CFPB director Rohit Chopra said in a release late last year. "We will be taking action to restore meaningful competition to this market."
Numerous U.S. banks aren't waiting for those changes to be imposed upon them and have already announced changes around the fees, which typically cost about $34 per overdraft, or doing away with them entirely.
TD also made several changes to its overdraft policies in the U.S. last year, including increasing the threshold of when overdraft fees would be charged, decreasing the maximum number of overdraft fees per day, and creating a no-overdraft account.
In 2020, the CFPB fined TD Bank $122 million over illegal overdraft practices, including charging fees without obtaining consent and unlawful overdraft enrolment practices.
