Over the past year, more than 20 major banks have overhauled their overdraft policies. While these changes have lowered the average cost of such fees, 96% of checking accounts still charge them.
The average cost of overdraft fees fell 11%, from a record high of $33.58 in 2021 to $29.80 this year, according to Bankrate.com’s annual checking account and ATM fees study released Wednesday. Dollar. The most common price for overdraft fees remains around $35, the same as it has been for the past 13 years.
Average insufficient funds (NSF) fees – similar to overdraft fees, typically assessed when customers overdraw their checking accounts with checks or recurring charges (such as rent or bill payments) – down 21% Year by year. The average cost of these fees this year was $26.58, the lowest level since 2004.
This is because banks like Citi and Capital One cut overdraft fees entirely, while many others – such as Bank of America, BMO Harris, Bank of America and Wells Fargo – have eliminated NSF fees this year . About 13 percent of the accounts analyzed by Bankrate so far have had NSF fees removed, and 4 percent have had overdraft fees removed.
Overdraft reforms by some banks that add real money to consumers; estimated to reach $4 billion annually, according to research by Pew Charitable Trusts.
While some consumers are saving more as the big banks remove these fees, these fees are still widely levied. In a survey of 245 financial institutions offering consumer checking accounts, Bankrate found that 96% of checking accounts charged overdraft fees and 87% charged NSF fees. Bankrate doesn’t analyze credit union checking account fees.
One reason for the slow pace of change across the industry: Overdrafts and NSF fees are a big revenue driver for financial institutions. Banks, credit unions, community banks and fintech companies will earn about $33.4 billion from such fees by 2021, according to economic research firm Moebs Services.
Industry experts also noted that sharply limiting overdraft charges could create more challenges than it solves for consumers. Overdraft protection provides bank customers with a viable source of short-term liquidity, without which some consumers may be forced to use riskier alternatives such as payday loans more frequently.
“Overdrafts remain one of the few,” Consumer Bankers Association President and CEO Lindsey Johnson wrote in a July op-ed. “The vast majority of those who regularly overdraft Users use the product knowingly and value the emergency safety net it provides when needed—whether it’s paying rent or simply putting food on the table.
While overdraft fees and NSF fees may have dropped last year, Americans are still affected elsewhere. Bankrate finds ATM fees rising. The average combined fee for out-of-network ATMs, which includes ATM surcharges and what banks charge their customers, rose 1.5 percent to $4.66 since last year, the highest level since 2019.
Consumer advocates and progressive Democrats argue that bank fees are often levied on the most unaffordable Americans. Some, including Rep. Carolyn Maloney (DN.Y.) and Sen. Cory Booker (DN.J.) and Elizabeth Warren (D-Mass.), want at least federal legislation to limit overdraft fees, despite their bill It has not been debated or passed in Congress.
“I would like to see more banks follow in the footsteps of Capital One and Ally and Citibank and do it voluntarily. But one of the things is doing something voluntarily and they can make it easy Say we’re not going to do that,” Maloney said at a news conference in July. “I think it’s very important that there is a legal reality behind this.”
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