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Are Overdraft Fees Really Just Loans Charging 17,000 Percent Interest?

Consumers whose checking accounts are running low generally have two options: Don’t pay for anything using the depleted account, or get a short-term cash infusion from the bank in the form of an overdraft loan. The price, of course, is the associated fee. A new report from the Consumer Financial Protection Bureau, based on account and transaction data provided by banks, gives details on how those people who choose to take the fee end up paying a lot for the overdraft cushion.

The new data show that the transactions that actually put people over the limit aren’t that large. Most of those who overdraft do so on debit cards and on purchases of less than $24.