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Americans paid $15 billion in overdraft fees last year, CFPB says

Article by Jackie Wattles | Featured on CNN Money

Americans have racked up billions — yes, billions — of dollars worth of overdraft charges.

In 2016, U.S. consumers paid a total of $15 billion in fees for bouncing checks or overdrafting –which is when a customer tries to make a purchase without enough money in their account to cover the transaction — according to new data released by the Consumer Financial Protection Bureau.

All banks with assets over $1 billion must report how much money it brought in via bounced check and overdraft fees, according to CFPB. And this year the industry rang up at $11.41 billion. That’s up 2.2% from 2015, which was the first year banks began reporting total overdraft and bounced check fees to the CFPB.

Adding in its best guess for what smaller banks and credit unions charged, and CFPB says $15 billion is roughly the grand total.

These fees are particularly troublesome for cash-strapped Americans, CFPB Director Richard Cordray said on a press call Thursday.

“Consumers living on the edge can find themselves racking up numerous overdraft charges,” Cordray said. “Despite recent regulatory and industry changes, consumers with low account balances and little margin for error continue to pay significant overdraft fees.”

Related: Money terms you’re too embarrassed to ask about

He also pointed out that the average amount of money consumers overdraft by is about $24 — but that banks often charge fees of around $34 for each overdraft incident.

Richard Hunt, the head of the Consumer Bankers Association, a bank advocacy group, responded to the study on Friday. He said he looks “forward to working with the CFPB on this issue, and we appreciate their concern for providing consumers with clear disclosures.”

But Hunt said banks already provide customers with “clear, concise procedures for opting into overdraft services,” and he pointed to a 2015 survey that found only 1% of respondents were confused by overdraft opt-in process.

Regulators have long been concerned about hefty overdraft charges.

The Federal Reserve decided to crack down on the issue in 2010 by mandating that banks must receive a customer’s explicit permission to approve a transaction when there are insufficient funds, and trigger overdraft fees. Otherwise, the transaction would simply be declined.

That year, the financial services industry was on track to make $38.5 billion on overdraft and non-sufficient fund fees, the economic research firm Moebs Services said at the time.

So, it appears that the fees have been curbed. But Cordray says data indicates some of the poorest Americans are still being hit hard by them.

He said customers that opt in and frequently overdraft “typically” wind up paying $450 per year in fees.

A 2014 Pew study also found more than half of the people who overdrew their checking accounts in the past year didn’t remember consenting to the overdraft service.

To address that issue, the CFPB said Thursday that it’s testing out a new version of the opt-in forms, which are designed to make the issue more clear for customers.

The updated form is meant to “explain that the opt-in decision applies only to one-time debit card and ATM transactions and does not affect overdraft on checks and online bill payments,” Cordray said.

“They also are designed to make clear that debit card and ATM overdraft is entirely optional,” he added.

Despite the agency’s concern, Cordray said the CFPB is not planning to propose stricter rules for banks when it comes to overdraft fees.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler NW is to earn our clients’ trust as their primary business and financial advisors.

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Portland, Oregon 97201

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How much life insurance do you need (if any)?

Article by

Before we deal with the downer of your death, let’s talk about your life.

Does anyone depend on you? Like, financially, depend on you?

No?

Then you’re probably fine without life insurance.

Of course, there are certain circumstances in which a single person with no one financially dependent upon them would need life insurance.

But, generally, financial advisers say young, single, childless folks can focus on paying down debts and building up savings first. Read more

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5 Steps to Retire Debt-Free

Article by by Maurie Backman | Found on CNN.com

America is a nation of borrowers, and while racking up debt can be dangerous at any age, it’s especially hazardous for those heading into retirement.

Because most seniors are behind on savings to begin with, carrying debt into retirement will only strain their already limited budget. Yet a growing number of households are kicking off their golden years with piles of debt — in fact, 20% of borrowers actually expect to die in debt. Read more

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Tax Tips for June Weddings

Article Found on AccountingToday

In all the frenzy that goes into the June wedding season, the last thing and bride- or groomzilla is thinking about is their tax situation – but as Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting points out, there are a host of tax issues that kick in when you say, “I do.”

Luscombe suggested a number of areas where a tax practitioner’s expertise may be particularly useful to the newlyweds. Read more

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Your Money: Strategies to Cope With Permanent Debt

Article by Chris Taylor | Found on Reuters

Most people think of debt as a temporary condition: Something you accumulate early in life, chip away at during prime earnings years, and say good riddance to well before retirement.

But what if your debt is permanent?

Then you might feel like Annette Loos, a 57-year-old mom from Kansas City, Missouri who has around $20,000 in student debt that she pays a bit of every month. Even though she has a good job as a project manager in the banking industry, her debt from her college days just sticks around. Read more

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How to Keep Yourself Safe From Fake Financial News

Article by Chris Taylor | Found Reuters

Hey, we have a great stock tip for you – a stone-cold lock, guaranteed profits!

Do you believe us? We hope not.

The bad news is that financial “fake news” does not present itself as such very easily, and it is everywhere these days.

A recent Harris Poll conducted for the American Institute of CPAs (AICPA) found that 63 percent of Americans say that fake news “has made it more difficult to make critical financial decisions.”

And it is not just suckers or confused seniors who are at risk. Read more

How Millennials Are Making Work From Home Work

Article By Sarah Landrum | Found on Forbes

Millennials. They grow up so fast. America’s “Generation Y” is now moving into management roles in the workplace. They’re also starting families. And all this “grown-up stuff” inevitably means one thing for them — Goodbye, work-life balance.

The generation who works harder for less money than Boomers now needs to juggle the responsibilities of gainful employment as well as leading their households. One ever-more-popular solution for reclaiming a few hours throughout the week is working from home. And millennials are making it work for them in a big way.

Right now, about a third of working millennials say achieving and maintaining this balance feels out of reach, which is probably why, as of 2015, the average worker in the U.S. telecommutes to work two days out of each month and why WFH has risen in popularity by 80% in just a little over 10 years. Read more

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What Role Should Your House Have in Retirement Planning?

Article by Ilana Polyak | Featured on Journal of Accountancy

Home is where the heart is. And it can also be where the assets are. As of 2011, home equity made up about three-quarters of the average American’s net worth, according to the U.S. Census Bureau. Despite this high figure, the home doesn’t always factor into retirement planning calculations.

For clients with ample assets, home equity is a less pressing issue. In that case, there’s no reason to “concern yourself with the house,” said David Imhoff, CPA/PFS, owner of Cornerstone Wealth Advisors LLC in Overland Park, Kan., because “we look at the house as the asset of last resort.”

But retirees of more modest means may need every possible option, including home equity. “It’s really surprising that more people don’t pay attention to it,” said Geoff Sanzenbacher, Ph.D., research economist at the Center for Retirement Research at Boston College. “The house can be a potential source of wealth.” Read more

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5 Mental Tricks To Make A Good Money Habit Really Last

By Julia Chang | Article Featured on Forbes

This story originally appeared on LearnVest as “5 Ways to Make a New Money Habit Stick.”

We’re nearly two weeks into 2017 and if you’re like many of us, you started the year fired up about your New Year’s money resolutions (no more Ubers!) but may have already begun to feel your motivation flag.

According to the 2016 Money Habits & Confessions Survey by LearnVest, more than a third of Americans predict they won’t be able to keep a financial resolution in 2017. Even though 48% of people acknowledge that kicking their bad money habits would be more beneficial than kicking bad lifestyle habits (and the percentage was even higher among Millennials, at 57%), they expect they’ll only be able to stick with their money goal for an average of six weeks before throwing in the towel completely.

Those stats show just how challenging turning over a new leaf can be, particularly if your efforts revolve around your finances.
Read more

11 Tips to Avoid a Tax Hit in 2015 - Isler NW

11 Steps To Avoid a Tax Hit in 2015

By Robert Powell

Take these steps now to avoid a tax hit in 2015:

  1. Review your estimated taxes. If you’re paying quarterly estimated taxes, now would be a good time to review your payments, especially if you had a big change in income from the prior year, said Paula Nangle, a certified financial planner with Marshall Financial Group in a Doylestown, Pa. Read more