A February 2012 study of over 2,000 banks has revealed a decline for overdraft fees collected from lending institutions. As you may remember, 2009 was a record year for banking organizations as they collected over $37 billion in overdraft fees. That's a sizable stream of income. The numbers from the report which came out today are just over $31 billion. That's a decrease with turns out to be just around 4.5%.
Michael Moebs, CEO of Moebs Services who carried out the study, comments on what they found:
“The average number of overdrafts per account, per year, has fallen from a peak of 10.5 in the 3rd quarter of 2008 by 29.5 percent, to 7.4 almost three years later,”
“The numbers indicate a fall off in volume, a rise in prices, and a loss of revenue, yet the overall market appears to have bottomed out. Amazingly, given all of the polar forces at play in the overdraft market -- volume, price, revenue, a slumping economy, high unemployment, regulator restraint by FDIC, and legislation by Congress -- the overdraft market is rising like the mythical phoenix and coming back,”
So it sounds like people still want the protection of overdraft, and they're still taking more out of their accounts than what they put in, but their not paying out as much. So nothing has really changes except the fee structure. I don't know what to think of this.
Moebs comments about this sentiment:
“It appears that the American consumer is saying they want overdrafts, but they want them as a reasonably priced safety net overdraft, and NOT an old fashion high penalty priced overdraft.”
The number of average overdrafts per account has fallen from 9.8 in 2008 to 7.4 in 2012. The average price charged for an overdraft ranges from $25 to $33. The report says most banks are charging $30 and credit unions are charging $25.
Moebs comments on the fees:
“More and more banks and credit unions are lowering the price of overdrafts,”
“This decision bodes well for these institutions as they try to reclaim lost market share to payday lenders, who only charge consumers a median price of $17.50. The closer financial institutions get to payday lenders, the more consumers will bank with Main Street institutions, and rely less on Payday lenders and the mega banks during this difficult economy,”