More than a third of “heavy” users – those who pay $ 100 or more in one-year banking rates to overstate their bank accounts – are in their late years until the early 1930s, found Pew.
One reason why younger consumers may be most affected is that they are more likely to use debit cards and charges are the majority of transactions involving bargaining fees, said Joy Hackenbracht, research researcher at Pew.
“Frequent discoveries are a financial burden,” he said.
Many banks allow customers to overload their control accounts when they do not have enough money to cover a purchase, but then charge a commission – typically $ 35 – known as an overdraft commission.
A small percentage of customers pay most overdrafts, find Pew and pay more than three such commissions per year. The typical amount of debit transactions involving an overdraft fee is $ 24.
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These customers essentially use the discovery option not only as occasional courtesy, but as an expensive form of short-term credit, found Pew. It is also a more risky credit, Pew explains, as unlike other loans, banks need not check whether a consumer has the financial capacity to repay the debt and that consumers do not have to have a reasonable time to repay it.
Although some consumers consciously use overdrafts as a form of credit, the practice should come with protections that go with other types of loans, said Susan K. Weinstock, banking banking director at Pew.
For example, he said, banks should disclose the actual effective percentage of the protection of discovery, which may be quite high.
The results stem from a Pew-commissioned telephone survey of 304 heavy expiration users by 2014. (Social Science Research has examined more than 8,400 people to find participants.) Sampling error margin is greater than or less than 7 percentage points.
In 2015, 628 major banks, which are required to report overdrafts and insufficient funds fees, said spending was $ 11.16 billion in revenue, or almost two-thirds of all revenue from reporting banks from consumer accounts .
Younger consumers, including college campuses, may be more vulnerable to tax havens, because many run their own finance for the first time, “said Christine Lindstrom, director of the Higher Education Public interests of the United States, an advocacy organization.
University students often open new accounts to receive their “redeem” help – the money left after the institution holds taxes and other costs – and can be stuck when the accounts charge the bills of exchange, he said.
Colleges often hire outsourced companies to distribute financial aid to students and companies promote their debit cards as a convenient way for students to receive money.
The Department of Education adopted last year the rules prohibiting the collection of the expense on the accounts used for student aid. The rules will come into force in July, so they will be in effect for the academic year that begins in the fall.
The rules, however, do not apply to other campus affiliated bank accounts that are not directly involved in the distribution of student financial aid. Students should shop for banking services, rather than just using those promoted by their schools, said Deborah Goldstein, executive vice president at the Center for Responsible Loan.
“There may be better available accounts,” he said.
The Office for the Protection of Consumers has examined banking discovery practices. Pew’s report invites the agency to adopt rules to ensure that outbound programs are used for “infrequent and accidental” events.
Pew’s suggestions include a requirement that sanctions be proportionate to the amount that caused the overdraft or bank costs to cover the transaction. Pew also suggested limiting the number of overdraft fees to six small fees per year; All hat fees should be covered by rules governing other types of credit.