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Capital One drops overdraft fees

Big banks are facing pressure over the widely disliked fees from upstart neobanks and Washington regulators alike.

Capital One Bank in New York City

Capital One Bank to drop overdraft fees.

Photo: Bill Tompkins/Getty Images

Capital One is dropping overdraft fees for consumer banking customers, the bank said Wednesday.

Big banks have been cutting back consumer fees as they face pressure from both startup neobanks as well as Washington regulators.

Neobanks have touted their fee-free accounts as a selling point over traditional banks. Meanwhile regulators have been looking closely at the fees, which some consumer advocates say unfairly target those who can't afford them.

The move would reportedly cost about $150 million per year for the bank.

Some traditional banks such as Ally have dropped these fees, but Capital One is the biggest yet to do so.

The CFPB recently said in a report that overdraft fees generated $15.47 billion in revenue in 2019 for banks — a profitable trend that continued even during the pandemic.

Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. He was also as a staff writer at Forbes covering social media and venture capital, and edited the Midas List of top tech investors. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

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