CFPB Report Finds Overdraft and NSF Fee Revenue Dropped by Nearly 50% in Q4 2022

May 31, 2023Banks & Credit Unions, Federal Regulation, News

The Consumer Financial Protection Bureau (CFPB) recently released a report highlighting overdraft and non-sufficient funds (NSF) fee revenue, finding that revenue for the fourth quarter of 2022 was approximately $1.5 billion lower than that of 2019, a decrease of 48 percent. The decrease suggests that households that incur overdraft or NSF fees saved an average of $150 annually.

Despite the substantial reduction, the CFPB found that consumers paid more than $7.7 billion in overdraft and NSF fees throughout 2022. However, from 2015 to 2019, when banks with assets over $1 billion have been required to report overdraft/NSF fee revenue, these banks reported revenue of $11-12 billion annually. 

Overdraft/NSF revenue trended downward throughout 2022, with quarterly revenue at roughly $2.2 billion, $2.0 billion, $1.9 billion, and $1.6 billion respectively for the first through fourth quarters. This trend indicates that overdraft/NSF policy changes have impacted bank revenues. 

“Though banks have made a range of changes to their policies over the last year-and-a-half, some banks continue to charge overdraft fees as high as $37 each,” the report reads. “Overdraft fees can total hundreds of dollars per day, exacerbating financial setbacks.”

Despite the general decrease in overdraft/NSF fee revenue, the CFPB reported substantial differences across banks. However, large banks like Wells Fargo, JPMorgan Chase, and Bank of America saw decreases of at least one-third in overdraft/NSF revenue.

Capital One and Citibank have entirely eliminated overdraft and NSF fees, and USAA experienced a 21 percent decline, but it does not charge overdraft fees and announced that it would completely eliminate NSF fees by the end of 2022.

Huntington’s revenues fell 66 percent, and it reduced its overdraft fee to $15 among other policy changes. Additionally, KeyBank’s revenues declined by 60 percent, and it eliminated NSF fees and cut its overdraft fee to $20.

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