Overdraft Practices Continue To Gut Bank Accounts And Haunt Customers
by Michael Corkery and Jessica Silver-Greenberg, New York Times
Angelina Lemus was puzzled. She had no idea why every month as much as $96 was disappearing from her Citibank checking account.
Months later, Ms. Lemus finally figured out the mystery — or at least part of it. Citibank was taking out the money to pay a loan, with an interest rate of 18 percent, that was devised to cover the shortfall every time Ms. Lemus overdrew her checking account.
The problem was that Ms. Lemus, a home health care worker from Queens, said she never signed up for the line of credit and was unaware that she was borrowing from it every time her account dipped below zero.
In all, Ms. Lemus had amassed $3,400 in debt — a tangle of interest, principal and other fees that have damaged her credit.
Ms. Lemus is one of millions of Americans tripped up by overdraft practices, a murky corner of consumer banking that, despite a lot of hand-wringing in Washington, costly litigation and customer rancor, remains largely untouched by financial regulation.
In a push for transparency since the 2008 financial crisis, regulators require banks to clearly disclose and explain the terms of just about every financial product, including credit cards and mortgages. But overdraft practices still come with hidden costs and confusing terms, bank customers, lawyers and consumer advocates say.
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Tags: Banks, CFPB, Deceptive, Predatory Lending