Some credit unions are banishing overdraft fees by creating checking accounts and debit card options that eliminate overdrafts by limiting an accountholders ability to withdraw only the amount of cash available in the account. The new system is called Cash Points Global (CPG) which is a controlled spending account with only electronic access via the CPG card. There are no checks, no paper statements and
all transactions are limited to the available funds in the account, so there is no risk of overdraft or NSF fees which can negatively impact a debtor’s finances and push them over the edge into bankruptcy.
It sounds like at least some of the credit unions have got the right idea. It is interesting that large banks are unable to create debit cards that don’t allow you to overdraft you account. It seems simple enough; but maybe it is simply not profitable. So many debtors get into debt/financial trouble and eventually need to file bankruptcy because of their overdrafted bank account and other debt problems. When a debtor, who might be already teetering on the edge of bankruptcy, overdrafts their bank account they can end up losing access to their bank account and creating more debt in the form of NSF fees. Once NSF fees pile up in a debtor’s bank account it can create a cascade of problems, bounced checks, threatening creditor calls/letters and even lawsuits which eventually can only be avoided in bankruptcy. By some credit unions taking action against overdrafts, they have gone a long way in preventing at least one of the causes of debt problems and bankruptcy. If credit unions can take into account the importance of restricting a consumer’s ability to overdraft their account, why can’t banks?