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Big Banks Made 8% Of Their Profits Last Year From Overdraft Fees
The country’s largest banks made $11 billion from overdraft fees last year, and the charges have become a pillar of their profitability.
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America’s big banks collected over $11 billion in overdraft fees in 2015, according to a new report from the Consumer Financial Protection Bureau, with the charges making up about 8% of their total profits for the year. The banks covered in the report — the 628 U.S. banks with assets of over $1 billion — have a total of $3.9 trillion deposited in consumer checking accounts.
Overdrafts are essentially short-term loans that allow users to access money even if their accounts are at or near zero, and can have incredibly high interest rates.
Regulators have pushed banks to reform their approaches to charging such fees, which are levied in large part on low-income consumers. But they still account for almost two-thirds of all fee revenue from consumer bank accounts, the CFPB said.
New regulations have required banks to have their customers affirmatively opt-in to overdraft services and the fees that come with them, but CFPB is still considering further rules. The Bureau said it was “looking closely at overdraft practices and will continue to analyze this data to better monitor and understand overdraft programs in the market and the consumer experience.”
[center]
[/center]
America’s big banks collected over $11 billion in overdraft fees in 2015, according to a new report from the Consumer Financial Protection Bureau, with the charges making up about 8% of their total profits for the year. The banks covered in the report — the 628 U.S. banks with assets of over $1 billion — have a total of $3.9 trillion deposited in consumer checking accounts.
Overdrafts are essentially short-term loans that allow users to access money even if their accounts are at or near zero, and can have incredibly high interest rates.
Regulators have pushed banks to reform their approaches to charging such fees, which are levied in large part on low-income consumers. But they still account for almost two-thirds of all fee revenue from consumer bank accounts, the CFPB said.
New regulations have required banks to have their customers affirmatively opt-in to overdraft services and the fees that come with them, but CFPB is still considering further rules. The Bureau said it was “looking closely at overdraft practices and will continue to analyze this data to better monitor and understand overdraft programs in the market and the consumer experience.”
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