Support truly
independent journalism
Chase Bank officials warned the company's 86 million customers that checking accounts might not be free in the future if the federal government implements regulations capping overdraft and late fees.
Chase is the largest consumer bank and one of the top credit card issuers in the US. It is now looking to charge for once-free services to cover the loss of revenue from the fee caps.
CEO of Consumer & Community Banking Marianne Lake told the Wall Street Journal she believes other banks will follow suit if the regulations pass.
Under the new proposal, the cost to overdraw on a bank account could drop to as little as $3. Currently, Chase Bank charges a $34 overdraft fee per transaction that overdraws a balance by more than $50, with a maximum of three fees per day. That means the maximum a person can currently be charged for overdraws in a business day is $102.
The proposed regulations are being spearheaded by the Consumer Financial Protection Bureau, and would limit banks to only charging customers the amount it would cost them to break even on an overdraft. One proposed version of the regulation would put an $8 cap on credit card late pay fees, and a $3 cap on overdraft charges.
Lake said that services that are currently free to bank customers — such as wealth management tools, credit score trackers and checking accounts — could end up with a cost if the government mandates fee caps.
“The changes will be broad, sweeping, and significant,” she said, noting that the people who can least afford those services will be the most affected by Chase's decision to pass the cost of regulation onto the consumer.
Lake warned that “it is reasonable to expect the industry will make sweeping changes to how products and services are offered and priced" if the regulations pass.
She further said obtaining credit will become “much more expensive and free checking may only be attainable for the most affluent Americans."
The banks are expected to fight the regulations and may challenge any regulatory legislation up to the Supreme Court, according to the Wall Street Journal.
