Fitch Ratings said on Tuesday that if regulators decide to stiffen restrictions on bank overdraft policies, banks’ major revenue source will be threatened and will ultimately force many institutions to end free checking programs.
Currently, the CFPB is investigating bank overdraft programs and enrollment policies. Fitch Ratings said that in 2011 , according to regulatory reports, American bank customers paid more than $34 billion in deposit service charges, including overdraft fees, CBS News reports.
“We believe more stringent guidelines could place further pressure on this source of income,” the ratings agency said, according to CBS News.
Fitch Ratings said that banks will continue to use the fee-for-service model. The agency added that the CFPB investigation, combined with other mounting regulations, will drive banks to more quickly do away with the free checking programs, ultimately subjecting the banks to federal enforcement actions.
Many banks have retracted their plans for checking fees. In 2011, Bank of America announced that it would begin charging a $5 monthly fee for accounts that use a debit card. Following public outrage, however, the bank retracted its plan. JPMorgan Chase and Wells Fargo followed suit and also dropped plans to institute monthly fees, CBS News reports.
Several large banks, including JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp., have also settled lawsuits over their overdraft fees.