April 1 is the public comment deadline for a proposed rule that would limit overdraft fees charged by “very large” financial institutions, or those with $10 billion or more in assets, according to a notice in Friday’s Federal Register.
The proposal was issued Jan. 17 by the Consumer Financial Protection Bureau (CFPB) and would apply to both banks and credit unions. The proposed rule treats all but minimal overdraft fees like credit cards and other loans and would provide clear disclosures and other protections.
The proposal, the agency said, would allow financial institutions to charge a fee in line with their costs or in accordance with an established benchmark. The CFPB said the proposal would set a benchmarks of $3, $6, $7, or $14 and is seeking comment on the appropriate amount.
In addition to the benchmarked fee amounts, the agency also proposes that the large banks issue interest rate disclosures along with the fees that they charge.
The CFPB, in Friday’s notice, says its aim is to ensure that extensions of overdraft credit “adhere to consumer protections required of similarly situated products, unless the overdraft fee is a small amount that only recovers applicable costs and losses.”
The proposal would revise Regulations E (Electronic Funds Transfer Act) and Z (Truth in Lending Act).