Overdraft fees climb to record $ 33.58 on average

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Dive brief:

  • The average cost of overdraft fees in the United States has increased by 22 cents over the past two years, reaching a record average of $ 33.58, according to a Bankrate survey published Wednesday. The survey covered 245 banks and savings institutions in 25 US markets.
  • The average minimum balance required to avoid monthly service charges on an interest-bearing checking account has swelled 31% over the past year, to $ 9,896.81 from $ 7,550.42 last year – a record high. the time, according to the survey.
  • However, the average surcharge for using off-grid ATMs fell for the fourth year in a row, to $ 1.51, a 10-year low. This cost usually combines with a separate ATM surcharge that averages out at $ 3.08, a figure that has remained stable over the past year. Atlanta carried the highest average total ATM fees of $ 5.23, according to the survey. Los Angeles had the lowest at $ 3.90.

Dive overview:

Despite the scrutiny of politicians and efforts by some banks to waive overdraft fees, the average cost associated with the controversial banking practice of charging customers for withdrawals in excess of their checking account funds is on the rise.

The average cost of overdrafting a checking account in the United States has fallen from $ 33.47 to $ 33.58 over the past year, according to the Bankrate survey.

This figure varies according to the metropolitan areas studied, from $ 35.70 in Philadelphia to $ 30.42 in Cincinnati.

Bankrate’s chief financial analyst Greg McBride advised users in the report to keep a close eye on their account balances.

“Put yourself in the line of defense by linking your checking account to your savings account at the same bank so that the money is immediately transferred to the checking account to cover any shortfall,” McBride said. “A growing number of fintech companies and neobanks are offering accounts that don’t charge overdrafts and are worth considering for those with more than the occasional overdraft. “

A number of financial institutions have launched overdraft alternatives over the past year – or have dropped the fees altogether. Ally Bank removed overdraft fees in June, as did Alliant Credit Union in August.

Citizens Bank this month introduced technology that warns users of overdraft withdrawals – a feature similar to PNC’s “low cash mode,” an offer – announced in April – that gives the bank’s customers a reserve of cash. 24 hours before overdraft fees are charged.

TD Bank, which the Center for Historical Lending reported took the largest percentage of its operating income from deposit service fees of any bank with more than $ 100 million in assets, unveiled a deposit account in June that does not allow customers to withdraw funds and has no minimum daily balance requirement.

Columbus, Ohio-based Huntington Bank launched a digital-only lending product in June that would give eligible customers immediate access to a line of credit up to $ 1,000 with no interest or fees if they s ‘sign up for automatic payments. San Antonio-based Frost Bank launched a feature in April that allows customers to overdraw their checking accounts on transactions up to $ 100.

Despite the growing number of workarounds, banks collected almost 40% more overdraft fees in the second quarter of 2021 compared to the same three-month period a year earlier, S&P Global Market Intelligence reported in August. That total, however, is 32.8% lower than the banks lined up in the second quarter of 2019.

It is not because the alternatives exist that they are free. According to Bankrate, about 48% of non-interest-bearing checking accounts have no fees attached, a figure that drops to 7.6% for interest-bearing checking accounts.

Two of the most recently launched alternative overdraft products – Bank of America’s Regions Now Checking and Balance Connect – have maintenance fees. The first charges a flat monthly fee of $ 5 and links a user’s regional accounts to provide overdraft protection with no transfer fees. The latter transfers the money from another Bank of America account of the user to an overdrawn account for a fee of $ 12 per transaction.

The average monthly fee for interest-bearing checking accounts to which these costs are attached are a record $ 16.35, according to Bankrate. For interest-free checking accounts, that figure is $ 5.08, a seven-year low, according to the survey.


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