One of America’s biggest banks has issued a stern warning about fees charged on checking accounts.
JPMorgan Chase’s chief executive of consumer and community banking has revealed that the company plans to pass on the costs of higher regulation to its customers.
Marianne Lake warns that regular banking will become significantly more expensive for Americans because of rules by the Consumer Financial Protection Bureau limiting overdraft and late fees.
He said if these rules become law, Chase would have to charge its 86 million customers for now-free services such as checking accounts.
“The changes will be sweeping, all-encompassing and significant,” he said. The Wall Street Journal. ‘The people most affected by this will be those who are unable to afford loans, and it will become more difficult for them to obtain loans.’
The Consumer Financial Protection Bureau has proposed a cap of $8 on credit card late payments and $3 on overdraft fees.
It is also considering capping debit card fees and the amount banks charge companies like Venmo and CashApp for access to and use of customer data.
Lake believes America’s leading banks will also follow Chase in passing the cost on to customers.
He stressed that basic services that people use, like checking accounts, credit score trackers, and planning tools, will likely no longer be free.
“It’s not practical for many services to be free if we can’t draw money from those profit sources,” he said.
But Dennis Kelleher, president of economics think tank Better Markets, said: ‘The banks say their only option is to pass their costs on to customers, but that’s not true.
‘Once again, banks are promoting their own profit maximisation efforts under the guise of what is good and bad for their customers.’
Banks have launched appeals and filed lawsuits to block these changes, most of them in the Northern District of Texas.
A rule limiting late fees on credit cards was passed by the Consumer Financial Protection Bureau in March, but a coalition of banks sued to stop it from becoming law. It is now pending appeal before a judge.
The average late payment fee charged by US banks is $32 per statement. Limiting this penalty to a quarter of that level means that 45 million credit card users would save an average of $220 per year.
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The agency said banks have hiked late fees over the past decade “using the excuse of inflation” to create an “irresistible revenue source”.
The rule would most benefit the poorest Americans — those who are unable to pay their credit card balances and end up paying fees as a result.
Although this limit has not yet become law, some companies are willing to pass the entire cost on to their customers.
However, Dan Goerlich, a partner at PricewaterhouseCoopers, doesn’t think the fees will be easy to bear.
He said, ‘Today most customers can access retail banking easily and seamlessly.’
‘Keeping services at zero cost may be disadvantageous but banks may be under pressure from other competitors who will offer low-cost services to customers.’
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