Better Markets filed a joint-comment letter with more than 140 organizations in strong support of a proposed rule from the Consumer Financial Protection Bureau (CFPB) that will curb overdraft fees by the large banks.

Why It Matters: The CFPB’s new overdraft rule will curb the abusive practice by large banks of charging overdraft fees that bear no relationship to the banks’ costs, that represent exorbitant interest rates, and that seriously burden the financially vulnerable.  Large banks typically charge $35 for each overdraft, far in excess of the minimal cost to the financial institution of covering an overdraft, with punitive damages exceeding 16,000% annually.

What We Said: Better Markets joined the National Consumer Law Center and a broad swath of consumer, civil rights, and other public interest groups to express support for the rule. However, while the large banks account for over two-thirds of all overdraft fees, we along with our partner organizations urged the CFPB to fashion an appropriate rule extending similar protections for customers of smaller banks.

The Bottom Line: Almost one in five consumers incur overdraft fees each year, costing them billions annually. This burden falls most heavily on lower-income families and communities of color, for whom the fees can represent a huge portion of their available funds. The CFBP’s rule represents an important step to alleviating this financial burden for millions of Americans.

You can read our full public comment letter here.