Consumer Payment Card News

Overdraft Protection Fees

Wallet a little thicker lately? That might have to do with Dodd’s CARD Act, which caused the drop-off in the median price of overdraft protection fees for the first time in more than 25 years. Down 6% from $28 in July 2010 to now stand at $27.50, the average cost of overdraft fees are falling subsequent to the Federal Reserve having issued regulations requiring banks and credit unions to obtain your consent for debit card overdrafts and overdrafts at ATMs. With this, 75% of those with checking account holders have agreed to said consent. Community banks and credit unions lowered the price of their overdraft fees while large Wall Street banks with over $50 billion in assets remained high at a median price of $35 and subsequently lost 2% of the market share. Also, 77% of you have not paid an overdraft fee in the previous 12 months; only 21% paid one or more overdraft fees, of which 69% were thankful the payment was covered while 29% wished the bank had refused the payment; and 90% of overdraft revenue only comes from frequent users.
Want proof? Overdraft revenue is expected to total no more than $35.4 billion this year, down from $37.1 billion in 2009 and on par with 2008. The hit to OD revenue was felt in 4Q/09, during which $2 billion in revenue was lost when banks and credit unions started to implement their own floors and ceilings on overdrafts in response to Congressional complaints, which was then followed by another $2.3 billion in revenue lost in 1Q/10 thanks to the Opt-In regulation by the Federal Reserve. Overall, Americans are paying an average overdraft fee of $27.50; Yous in the East are paying about $25, down from $29 in July; Y’all down South fork over around $29, down only $1 from July; and you Midwesterners pay $26.50, $1.25 less than over the Summer. Stick to politics Dodd; let Schwarzenegger do movies!

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