Banks Collected $11 Billion in Overdraft Fees in 2019
Banks last year collected $11.68 billion from customer accounts in overdraft fees, according to new research released last week by the Center for Responsible Lending (CRL), an advocacy group focused on financial and lending issues. The findings were based on a review of 2019 overdraft-related revenue from banks with assets of $1 billion or more as well as the overdraft practices of the United States’ 10 largest banks. CRL has vocally advocated for suspending overdraft fees during the COVID-19 pandemic.
“Banks should not experience an unprecedented windfall as the direct result of their customers’ unprecedented distress,” said Peter Smith, a co-writer of the report, according to a New York Times article.
The report found that more than 80 percent of overdraft fees were paid by 9 percent of account holders. The typical overdraft fee is $35, the study found.
Mike Townsend, a spokesman for the American Bankers Association, told the New York Times that many banks were providing “unprecedented assistance” to customers during the pandemic, including “fee waivers, deferred payments and other accommodations depending on the customer’s individual circumstances.” The American Bankers Association also provided the Times with a list of banks offering assistance, including suspending overdraft fees either for a certain time period or on a case-by-case basis.
This is not the first time overdraft policies have made the news as a result of the global coronavirus pandemic. Some bank customers reported being unable to receive their full relief payments due to negative balances. Other banks, however, made the full payments available even for customers with accounts that had been overdrafted and thus held a negative balance.