• Enable banks and credit unions to offer affordable small-dollar loans in place of expensive overdraft penalty programs. The CFPB should set clear product safety standards for such credit products, including guidelines for affordable payments and reasonable time to repay.²² This should be done in conjunction with other federal agencies that regulate the safety and soundness of financial institutions (known as “prudential” regulators) as appropriate.
• Make overdraft penalty fees reasonable and proportional either to the financial institution’s costs in providing the overdraft loan or to the overdraft amount.
• Allow financial institutions to charge customers a maximum of six overdraft fees in any 12-month period, and limit such fees to one per negative-balance episode (i.e., an overdraft that incurs one or more fees). When customers incur the maximum number of fees, any additional credit extended to them should be required to comply with the rules that govern other types of credit.
• Prohibit banks and credit unions from maximizing overdraft fees when posting deposits and withdrawals, such as by reordering transactions by dollar amount from highest to lowest, causing the account to be overdrawn more quickly and incur more fees.
• Require financial institutions to provide account holders with clear, comprehensive terms and pricing information for all available overdraft options to ensure that consumers can make the best choice for their personal situations, including choosing not to opt in to any coverage.

"Banks are effectively charging their most financially vulnerable customers high prices for short-term loans... Consumers—especially those who are most financially vulnerable—need protections to help them avoid expensive overdraft fees and remain viable in the banking system," said the report.