Big Banks Are Ripping Off Americans, Again

Thursday, February 27, 2025, was a sad day for bank customers.

For the past several months, the Consumer Financial Protection Bureau (CFPB) had been pursuing a lawsuit against Capital One, you see. CFPB alleged the bank engaged in “deceptive acts and practices” by not making it clear to customers, holding “360 Savings” accounts, that they were receiving below-market interest rates on their accounts, and not the much more generous rates Capital One was advertising for holders of “360 Performance Savings” accounts.

According to CFPB, this allegedly deceptive practice may have cost Capital One customers as much as $2 billion, as calculated by comparing the interest they actually were paid on their 360 Savings, versus the interest they thought they were getting at the rates Capital One had advertised for 360 Performance Savings.

Last Thursday, however, under instructions issued by the agency’s new acting director Russell Vought, the CFPB dismissed its lawsuit against Capital One “with prejudice.” Meaning, not only will Capital One customers not get the money they are (allegedly, of course) owed. It also means the CFPB won’t be able to bring the lawsuit again under a future Presidential administration.

Capital One reportedly “welcomed” CFPB’s decision to drop the lawsuit. Capital One customers, on the other hand, are probably less than thrilled with the decision.

Banking shenanigans

Not all banks engage in conduct as (allegedly) sneaky as Capital One’s. But like the old saying goes, “a few bad apples spoil the bunch,” and American banks have developed an occasionally deserved reputation for pulling dirty tricks on their customers as they seek to transfer money from your wallet to their balance sheets.

Take overdraft protection for example. Historically, it’s been marketed as a way to ensure that if you accidentally write a check for more money than you have in your account, the bank will send payment anyway (and require you to make up the difference later, plus pay an overdraft fee). In practice, though, some banks are believed to have gamed the system to maximize the number of overdrafts you make, and the number of times they can ding you for an overdraft fee.

For example, say you have $100 in your account, and you write checks for $100, $20, and $5. One bank might deduct the $5 payment, then the $20 payment, then the $100 payment, triggering overdraft protection only once, on the final payment. A less scrupulous bank, however, might deduct the $100 payment first, draining the account and ensuring the $20 and $5 payments will trigger overdraft protection, and charge you overdraft fees twice.

Pretty sneaky, sis.

Minimum balance fees are another way banks can trip you up, hoping you don’t read the fine print too carefully. Quick. Without looking it up, do you know what the minimum balance is on your checking account is? Do you know if there even is a minimum balance?

You should know this, because if the minimum balance is $500 for example, and you have $599 in your account, but withdraw $100 on your ATM card, you will fall below that balance and may trigger a minimum balance fee.

And then there are wire transfer fees, foreign transaction fees, inactivity fees. All sorts of fees hidden in all sorts of fine print. Cross any of these red lines, and your first clue that you’ve crossed it may be a fee showing up on your next monthly statement. And if you throw those in the trash, or send them to your junk folders when they arrive in the mail, you may end up paying the fees without ever knowing you paid them.

A cynical person might even suspect that your bank hopes you don’t read your statement, or notice the fees.

Banks’ favorite trick to keep more of your money

All of these fees may be dwarfed, however, by what’s arguably the most common practice among banks today: Paying below-market interest on your savings, and hoping you don’t bother to shop around for a better rate.

According to SavingsAccounts.com, the average bank today pays about 0.45% interest on checking and savings account balances. Many banks pay even less than that. Chase Bank for example, has held its interest rate at the ridiculously low level of 0.01%, or 45 times below average, for years. The fact that Chase remains the largest bank in America, rather than seeing its customers flee in droves in search of better interest rates, is perhaps a testament to consumers’ failure to notice the fine print, or their laziness in not seeking out better interest rates, or perhaps both.

In any case, it seems pretty clear proof that banks have little incentive to change their ways. I mean, if customers are going to let a bank with as high a profile as Chase get away with paying below-average interest, there’s really little incentive for other banks to change their ways!

What can you do to change their minds, and at the same time, put a little more money in your own pocket? It’s simple really. As SavingsAccounts.com points out, there are still a good handful of banks that do pay above-average interest rates of as high as 3% or even 4%. That means, if you put in the effort to switch from even an average bank, much less a bank as miserly as Chase, to one of these other banks, you could pretty easily increase the amount of interest you collect by as much as 10x!

Maybe, if enough of us do this, it will encourage banks to raise their interest rates en masse, and finally stop lining their pockets with our money.

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