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Overdraft Fees

Welcome to the News View for "Overdraft Fees".

Here, on these archive pages, you'll find all of the articles on Payments News for Overdraft Fees listed in date sequence beginning with the most recent article at the top of the page.

Click here for a complete listing of what's available in the Payments News Archive - organized by both posting date and subject category.

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April 02, 2014

Headline News from PaymentsNews.com - April 2, 2014

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Note: Headline News is compiled by Glenbrook Partners. Throughout the day, as we spot interesting developments, this post is updated. Do you have news to share? Tell us here: gotnews@paymentsnews.com!

February 27, 2014

Headline News from PaymentsNews.com - February 27, 2014

Glenbrook's Payments Insight Workshop series this spring focuses on three key topics for payments professionals: Bitcoin - Basics and Beyond (March 26), Data in Payments (April 22) and Innovation in Payments (May 8). Offered in a small group setting in the San Francisco Bay Area, registration is now open for each of these workshops!

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Note: Headline News is compiled by Glenbrook Partners. Throughout the day, as we spot interesting developments, this post is updated. Do you have news to share? Tell us here: gotnews@paymentsnews.com!

January 16, 2014

Headline News from PaymentsNews.com - January 16, 2014

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Note: Headline News is compiled by Glenbrook Partners. Throughout the day, as we spot interesting developments, this post is updated. Do you have news to share? Tell us here: gotnews@paymentsnews.com!

June 11, 2013

CFPB Explores Bank Overdraft Fees, Questions Overdraft Protection

Cfpb logo 140x60pxThe US Consumer Financial Protection Bureau (CFPB) has published a new report on bank and credit union overdraft practices that it says "raises concerns about whether the overdraft costs on consumer checking accounts can be anticipated and avoided."

The bureau found big differences across financial institutions when it comes to overdraft coverage on debit card transactions and ATM withdrawals, and said that drew into question how banks sell this account feature. The report also finds that consumers who opt in for overdraft coverage end up with more costs and more involuntary account closures.

Consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that overdraft programs at some banks may be increasing consumer costs,” said CFPB Director Richard Cordray.

“What is often marketed as overdraft protection may actually be putting consumers at greater risk of harm.”

The report titled "CFPB Study of Overdraft Programs" is available here. A fact sheet about financial institution overdraft practices is also available from the CFPB.

March 19, 2012

Overdraft Fee Revenue in the U.S. Falls 4.5% to $31.6 Billion in 2011

Survey graphic 140pxAccording to a recent study by Moebs Services, banks received $31.6 billion in overdraft fee revenue in 2011, a decline of 4.5% from 2010.

The Moebs study found that the national median price for an overdraft fee increased to $29, up from $27.50 in 2010. According to Michael Moebs, CEO of Moebs Services, financial institutions increased the prices of overdrafts to cover anticipated costs brought on by the heightened regulatory environment of the FDIC and the implementation of Dodd Frank Act.

These figures reflect the findings of a February 2012 survey of 2,273 banks and credit unions completed by Moebs $ervices, an independent economic research firm.

May 10, 2011

February 01, 2011

November 22, 2010

Survey Says 22% of Americans Have Opted-In for Debit Card Overdraft Protection

survey_graphic_140px.pngA recent national poll by the Consumer Reports National Research Center has found that 22% of bank customers holding an ATM or debit card have chosen to opt-in to debit card overdraft protection. "A large majority of poll respondents said they wanted the same right to choose whether to be covered by fee-based overdraft programs for check transactions."

September 16, 2010

Survey Says Most US Consumers Avoid Overdraft Fees

survey_graphic_140px.pngMost bank customers don't pay overdraft fees, according to a new survey released by the American Bankers Association. According to the survey, 77% of consumers said they did not pay any overdraft fees in the previous 12 months, while 21% said they paid one or more. 2% said they did not know whether they paid an overdraft fee.

August 31, 2010

46% of Bank Customers in US Choose Overdraft Protection

survey_graphic.pngA new survey commissioned by the ABA shows 46% of bank customers report they did - or will - opt in to their bank's overdraft program, saying they are willing to pay a fee for the service to ensure that debit card transactions will be approved even if their account is overdrawn. Prior to the new federal regulations (effective 8/15/2010) no permission was required to provide and charge customers for overdrafts.

August 16, 2010

A Look at Retailer Bounced Check Fees

According to a recent study by Moebs Services, merchants are now charging $30 as a median fee in comparison to $25 in 2009, surpassing what banks charge for NSF fees.

“This is the highest percent increase we have ever seen national retail merchants charge consumers for writing a bad check,” said Michael Moebs, CEO and economist at Moebs $ervices, a national economic research firm based in Lake Bluff, IL. “Retailers’ fees now surpass those of banks and credit unions median fee of $27 for an NSF.”
READ MORE »

August 12, 2010

Consumers Still Opting in to Banking Overdraft Reform, Despite Confusion

According to a recent Mintel Comperemedia consumer survey, awareness of the new Reg E overdraft legislation is surprisingly high with 60% of online adults aware of the upcoming changes.

But "Most consumers are unable to define exactly what Reg E will cover, making banks' efforts to promote it that much more difficult," comments Susan Wolfe, VP of financial services at Mintel Comperemedia. "In other words, consumers are aware that changes are coming to their overdraft programs, but are not exactly sure what it means for them."

July 13, 2010

Payday Loans Are a Better Deal for Consumers Than Overdraft Fees

Consumers who are frequent users of overdraft (OD) fees at banks and credit unions could save money by bridging their cash gap with a 14- day payday advance loan, rather than paying checking account OD fees, according to a recent national study by Moebs Services.

“The average amount overdrawn on checking accounts by about 70% of consumers, according to the General Accounting Office and the FDIC, is less than $100,” said Michael Moebs, economist and CEO of Moebs $ervices. “Consumers who use a payday advance loan for $100 or less will pay an average of $17.97, which is 33 percent less than the $27.01 it costs for an overdraft of that same amount from a checking account,” he explained.
READ MORE »

May 10, 2010

New Overdraft Pricing at US Bank Takes Effect This August

U.S. Bank has announced a new overdraft policy that includes a reduced fee of $10 for overdraft transactions that are $20 or less. The pricing change takes effect this August. READ MORE »

March 10, 2010

Bank of America Plans to Change Debit Card Overdraft Practices

Bank of America has announced that "beginning this summer it will only authorize single debit card transactions at the point of sale if a customer has enough money in their account at the time. This change will help customers by reducing the likelihood they may inadvertently overdraw their account and thus eliminate unexpected overdraft fees on these transactions. Customers will still have the choice to link their checking account to another account through Overdraft Protection to cover these types of transactions." READ MORE »

January 08, 2010

A Look at the New Overdraft Fee Rules

In an article titled "New overdraft rules: Worst of both worlds?", MSNBC's Bob Sullivan writes about overdraft fees - and the new rules scheduled for July implementation as announced by the Federal Reserve. Sullivan writes: "But it should come as no surprise that there's a catch. In fact, there are lots of them."

January 03, 2010

US Banks, Issuers Step Up to Replacing $50 Billion in Revenue in 2010

In an article titled "Banks Roll Out New Check, Card Fees", Robin Sidel wrote for the Wall St. Journal's Saturday edition about steps that banks are taking to deal with up to $50 billion in lost revenue in 2010 as a result of changes to credit card and checking account legislation and regulatory requirements.

December 31, 2009

2010 - The Year of Consumer Power

In her "Color of Money" personal finance column in today's Washington Post, Michelle Singletary writes about 2010 being the "Year of Consumer Power" - reflecting on the legislative (The Credit Card Accountability, Responsibility and Disclosure Act of 2009) and regulatory (overdraft fees) changes that are scheduled to take place as 2010 plays out.

December 29, 2009

How Should Banks Replace Upcoming Losses in Overdraft Fee Income?

A few weeks back, Glenbrook's Carol Coye Benson issued a challenge - asking "What Are the Best Ways for Banks to Replace Lost Overdraft Fee Income?" She was looking for creative ideas from the community on how bankers should deal with perhaps their most significant financial challenge ahead.

Today, Carol has summarized the results of her search for ideas in a new post on PaymentsViews.com titled "No News is Bad News?". She writes:

We got very few ideas at all, and none from bankers! The no-news-from-banks could, of course, be because banks are keeping their well-laid plans a deep and dark secret. Or it could be …. there are just no good ideas?"

Read her full article here.

December 27, 2009

A Look at Bankers' Fee Income Challenges

In an article titled "Consumer Fees: The Hits Keep Coming", Maria Aspan writes for the American Banker about how bankers are scrambling to deal with the assault on various banking and credit card fees - noting that "the banking industry has been shaken out of its complacent reliance on consumer fee income." Aspan quotes Glenbrook's Carol Coye Benson:

Overdraft fees for bankers are like heroin — they know it's bad for them (particularly in building the trust relationship with customers that they want), but the revenue just feels so good," Carol Coye Benson, a managing partner in the consulting firm Glenbrook Partners LLC, wrote in a November blog post. "The Fed's new rules are detox."

December 23, 2009

Hot Topics in Payments for 2009 - Overdrafts, Interchange, Gift Cards

Google's Insights for Search provides some handy tools for exploring what topics folks have been searching for over time. For example, here's a graph of search activity over the last five years on the subject of overdraft fees. Needless to say, they become a very hot search term (and consumer issue) in 2009!

Here's a less dramatic example - this time for interchange fees.

Finally, one of my favorites - gift cards - look at this seasonality!

December 21, 2009

A Look Back and Forward at Prepaid Cards

In an article titled "Prepaid vs. Checking: Fairer Fight?", Maria Aspan writes for the American Banker about the state of the prepaid card business in the US - and how the upcoming checking account overdraft fee reforms could affect the prepaid card industry.

December 20, 2009

Pros and Cons of Debit Cards

In an article titled "Debit-card use grows, but risks still an issue", Chuck Strickler writes for The Columbus Dispatch about debit cards - how they help consumers stay in control but also how they're different than credit cards.

In an article titled "One debit-card overdraft can trigger an avalanche", Los Angeles Times personal finance columnist Kathy Kristof writes about how one overdraft was turned into four overdraft fees when one consumer's bank (Chase) reordered the payments posting to her checking account. Kristof goes on to note that Chase has announced it plans to eliminate that practice "in the first few months of 2010".

December 15, 2009

December 07, 2009

What's a US Retail Bank to Do?

Over on our sister blog PaymentsViews.com, Glenbrook's Carol Coye Benson asks "What Are the Best Ways for Banks to Replace Lost Overdraft Fee Income?".

She writes: "Bank income from debit card overdraft fees is variously estimated as $25 billion to $38 billion annually. The recently announced Federal Reserve Bank regulations requiring opt-in procedures will result in a gigantic hit to retail bank P&Ls, as we wrote about recently."

Do you have some ideas for what retail bankers should be doing to respond to the revenue impacts? You can share them here.

November 17, 2009

This Afternoon's Senate Hearing: Abusive Overdraft Fees

The US Senate Committee on Banking, Housing and Urban Affairs is holding a hearing this afternoon on the subject of "Protecting Consumers from Abusive Overdraft Fees: The Fairness and Accountability in Receiving Overdraft Coverage Act". The witnesses will be: Mr. Mario Livieri, Consumer, State of Connecticut; Mr. Michael Calhoun, President, Center for Responsible Lending; Mr. Frank Pollack, President and CEO, Pentagon Federal Credit Union; Mr. John Carey, Chief Administrative Officer, Citibank NA; and Ms. Jean Ann Fox, Director of Financial Services, Consumer Federation of America. READ MORE »

November 13, 2009

Watch Out! Big Changes in Retail Bank Pricing Are Coming

Over on our PaymentsViews.com blog, Glenbrook's Carol Coye Benson reflects on yesterday's announcement by the Federal Reserve of new rules prohibiting banks from charging overdraft fees on debit card and ATM transactions without first obtaining consumer opt-in. Carol speculates on what retail banks will do to deal with the potential loss of overdraft fee revenue that could result.

November 12, 2009

Fed Prohibits Debit Card Overdraft Fees without Consumer Opt-In

FederalReserve-130px.jpgThe Federal Reserve Board has announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

Before opting in, the consumer must be provided a notice that explains the financial institution's overdraft services, including the fees associated with the service, and the consumer's choices. The final rules, along with a model opt-in notice, are issued under Regulation E, which implements the Electronic Fund Transfer Act and are effective July 1, 2010. READ MORE »

November 06, 2009

Wells Fargo Estimates Impact of New Overdraft Fee Policies

In its SEC 10-Q filing today, Wells Fargo estimated that the impact of its new overdraft fee policies will be a $300 million after tax reduction in its fee revenue for 2010.

Quoting: "We recently announced policy changes that will help customers limit overdraft and returned item fees. We currently estimate that these changes will reduce our 2010 fee revenue by approximately $300 million (after tax), although the actual impact could vary due to a variety of factors including implementation timing and customer behavior in response to the policy changes."

October 30, 2009

CRL Supports Legislation to Reform Bank Overdraft Fees

Congressional proposals to rein in abusive overdraft practices are long overdue, Center for Responsible Lending executive Eric Halperin told the House Financial Services Committee today (full testimony). Halperin, who is director of CRL's Washington office, gave full support to legislation aimed at reforming bank overdraft programs, which cost consumers $23.7 billion last year and are among the most predatory lending products on the market.

"Charging people a $35 fee for a small, debit card transaction is unacceptable," said Halperin, director of CRL's Washington office. "It doesn't save them bounced check fees, it simply skims money from their account and puts them in a bind."

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