(NewsNation) — The head of Chase Bank has issued a warning that its customers may soon have to pay for their checking accounts.
The Wall Street Journal reports Marianne Lake, CEO of consumer and community banking at JPMorgan Chase, stated that if Washington enacts new rules to cap overdraft and late fees, the currently free accounts and other wealth management tools will incur charges.
Chase is already planning to pass these costs onto customers, and Lake expects other banks will follow suit if the proposed regulations become law.
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The cost to overdraw a bank account could drop to as little as $3 under a proposal by the White House.
Under the change, proposed by the Consumer Financial Protection Bureau, banks could only charge customers what it would cost them to break even on providing overdraft services. This would require banks to show the CFPB the costs of running their overdraft services, a task few banks would want to handle.
Alternatively, banks could use a benchmark fee that would apply to all affected financial institutions. Regulators proposed several fees — $3, $6, $7 and $14 — and will gather industry and public input on the most appropriate amount. The CFPB says it arrived at these figures by looking at how much it cost banks to recoup losses from accounts that went negative and were never paid back.
Most of the biggest banks have added safeguards to customers’ accounts to allow them to bring the balance back into positive territory before they incur a fee, which can be as high as $39 at some banks.
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Opponents of overdraft fees often cite the example of a $3 cup of coffee costing someone $40.
One criticism of overdraft fee practices is that the cost to a bank to cover routine purchases is low and banks have safeguards in place to stop customers from taking their accounts deep into red.
The banking industry is expected to fight the new regulations vigorously to protect the fee revenue. The regulations are likely to end up in a protracted legal battle that could reach the Supreme Court. If the rule is adopted and survives political and legal challenges, the new regulations would go into effect in the autumn of 2025.
The Associated Press contributed to this story.
