Overdraft Fees on the Rise

December 13, 2011, Written By Lynn Oldshue

Overdraft fees are again taking a larger bite out of our pocketbooks.

In July 2010, new regulations from the Federal Reserve required consumer consent for overdraft protection for ATM and debit card transactions. These overdraft regulations cost the banks billions of dollars in revenue, but the overdraft fees are increasing once again.

Overdraft revenue fell for six quarters, but have now risen by $700 million in the second quarter of 2011, according to Moebs Services. In addition, the average number of overdrafts per household increased during the same period. Moebs found that 26 percent of consumer checking account holders intentionally overdraw their checking account.

New research by the Pew Charitable Trust found that overdraft fee will cost Americans an estimated $38 billion in 2011.

The Pew Charitable Trust found that banks can still maximize the number of times an account goes negative by processing deposits and withdrawals in an order that reduces the account balance as quickly as possible. They suggested the posting should be neutral.

Overdraft protection is not a necessity and opting out is an easy way for consumers to avoid an expensive fee. If you don’t have enough money in your account and you don’t have overdraft protection, then the transaction will be declined. That would seem to be a much better alternative than these costly overdraft fees.


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The information contained within this article was accurate as of December 13, 2011. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.