One of America’s largest banks has issued a stark warning about impending charges on checking accounts.
JPMorgan Chase’s chief executive of consumer and community banking has revealed that the firm plans to pass on the costs of increased regulation to its clients.
Marianne Lake warned that rules by the Consumer Financial Protection Bureau to limit overdraft and late payment fees will make traditional banking services significantly more expensive for Americans.
She said Chase would have to charge its 86 million customers for now-free services like checking accounts if the rules become law.
“The changes will be broad, radical and significant,” he said. The Wall Street Journal. “The people who will be most affected will be those who can least afford it, and access to credit will be more difficult to obtain.”
Marianne Lake, a top executive at one of America’s largest banks, has issued a stark warning about looming charges on current accounts.
JPMorgan Chase’s chief executive of consumer and community banking has revealed he is planning to pass on the costs of increased regulation to his clients
The Consumer Financial Protection Bureau proposes an $8 limit on late credit card payments and a $3 limit on overdraft fees.
It is also considering a cap on debit card fees and the amount banks can charge companies like Venmo and CashApp to access and use customer data.
Lake believes major U.S. banks will follow Chase’s lead and pass on the costs to customers.
He stressed that basic services people are used to, such as checking accounts, credit score trackers and planning tools, will likely no longer be free.
“It’s not practical for many of the services to be free if we can’t leverage those revenue pools,” he said.
But Dennis Kelleher, president of economic think tank Better Markets, said: “Banks say their only option is to pass on their costs to customers, but that’s not true.
Lake warned that rules by the Consumer Financial Protection Bureau to limit overdraft and late payment fees will make traditional banking services significantly more expensive for Americans.
The Consumer Financial Protection Bureau, headed by Rohit Chopra, is proposing an $8 limit on late credit card payments and a $3 limit on overdraft fees.
Lake said Chase would have to charge its 86 million customers for now-free services like checking accounts if the rules become law.
‘Once again, banks are disguising their attempts to maximise their own profits under the guise of what is good or bad for customers.’
Banks have filed appeals and lawsuits, primarily in the Northern District of Texas, to block the changes from being implemented.
The rule limiting late fees on credit cards was approved by the Consumer Financial Protection Bureau in March, but a coalition of banks filed a lawsuit to block it from becoming law. It is now pending appeal before a judge.
The average late payment fee charged by U.S. banks is $32 per statement. Capping the penalty at a quarter of that level would save 45 million credit card users an average of $220 a year.
The agency said that over the past decade, banks have raised late payment fees using “the excuse of inflation” to create an “irresistible revenue stream.”
The rule will primarily benefit poorer Americans: those who easily find themselves unable to pay off their credit card balances and rack up fees as a result.
Even though the cap has not yet become law, some companies are prepared to pass on any costs to their customers.
However, Dan Goerlich, a partner at PricewaterhouseCoopers, does not believe that it will be easy to pass on fees.
“Today, most customers can access retail banking easily and seamlessly,” he said.
‘It may be disadvantageous to maintain zero-cost services, but banks may be forced to act against other competitors who will offer customers low-cost services.’
