Banking Industry Rakes In the Moolah with Overdraft Fees

These estimations are just preliminary findings of last year’s survey. Presently there are not going to be any policy recommendations regarding the matter, as this requires further account, data level reviews. Overdraft protection is an expensive business and the policies for this are bank specific. In this kind of service bank pays the overdraft while taking away a fee from the consumers concerning the services rendered. Average fees paid by customers for such overdrafts come to roughly $225. Approximately, 27% of all available checking accounts pay single overdraft charges according to the 2011 finding.

The report does not divulge the name of banks included in the survey and subsequent data findings. It also includes comment inputs from industry groups, the public, and consumer advocates. This study involved at least half or more of all deposit accounts presently available. From the middle portion of 2010 onwards, banks can no longer charge overdraft fees for withdrawals from the ATM. This also includes transactions involving debit cards unless the customers specifically ask for such services. A present report reveals that customers opting for such services tend to pay up higher amounts in fees. This also leads to complete account closure most of the time when compared to other customers who have opted out of such coverage.

Ironically, the very same rules meant to protect the consumers tend to place them at greater risk financially. The overdraft protection program is a glaring case in point in this regard, and most people are better off without such programs. Opt in rates for the program is mostly bank specific. In some banks, it is as high as 40%, while others show a dismal 10% participation rate.

Interestingly, the findings say nothing about removing the overdraft fee structure completely. It only raises concerns regarding financial constraints involving high overdraft fee and resultant account closures. The varied results coming from different banking institutions indicate towards the need for further research into the matter. This is important for reaching a conclusive decision relating to the banking penalty system.