In abstract
A brand new California regulation will prohibit state-chartered banks from charging charges for withdrawals which can be instantaneously declined.
Californians who attempt to withdraw cash however don’t have sufficient of their financial institution accounts received’t fall deeper right into a monetary gap from having to pay a positive, because of a brand new state regulation.
The regulation covers situations by which banks cost clients when their withdrawals are declined instantaneously, similar to at ATMs, due to inadequate funds. It takes impact Jan. 1.
Meeting Invoice 2017 applies to banks and credit score unions which can be regulated by the state; Gov. Gavin Newsom signed it in September. The invoice was backed by a number of client advocacy teams, together with the California Low-Earnings Shopper Coalition and East Bay Group Legislation Heart, which known as penalties for inadequate funds “junk fees” and stated eliminating them will shield financially susceptible shoppers.
Tim Grayson, the invoice’s creator, stated when he launched it in Could that it could “help prevent fee creep in the banking industry.” Grayson, a Democrat from Harmony, is an incoming senator who was within the Meeting via the tip of the 2024 legislative session.
Study extra about legislators talked about on this story.
The Shopper Federation of America, a sponsor of the invoice, stated frequent fees for inadequate funds are $30 or extra.
The California Credit score Union League, which at first opposed the invoice and stated credit score unions “do not charge these types of fees,” finally took a impartial place. However the state Division of Monetary Safety & Innovation has discovered that many credit score unions do have revenue from insufficient-fund fees; a 2022 state regulation tasked the company with amassing information from banks and credit score unions about their charges.
The regulation by Grayson is much like a rule by the Shopper Safety Monetary Bureau — the federal watchdog company that’s in President-elect Donald Trump’s crosshairs — that applies to federally chartered banks.
Consistent with the rising nationwide push to remove junk chargesNewsom additionally signed one other invoice addressing overdraft charges: Senate Invoice 1075 will restrict credit-union charges for inadequate funds to $14 until a decrease federal restrict is ready. That turns into regulation in 2026. And he signed Meeting Invoice 2863which can make it simpler for shoppers to cancel subscriptions and requires firms to get consent from their clients earlier than charging them to resume or when a free trial ends. It goes into impact July 1.
