Big Banks Make Billions on Overdraft Fees

Banks with Most Income per Account Have Most Complaints to CFPB

Maryland PIRG Foundation

An analysis of new government data by Maryland PIRG found that big banks made $8.4 Billion in overdraft fee income in the first three quarters of 2016, up nearly 4% from the same period in 2015. Since the beginning of 2015, all banks greater than $1 Billion in assets have been required to report fee data quarterly and are included in the study.

“Banks that relied most heavily on overdraft revenue had more complaints to the Consumer Financial Protection Bureau in the complaint category “account funds being low,” said Maryland PIRG Director Emily scarr. “It’s clear that we need to protect a strong CFPB to make sure banks are following the law.”

Key highlights of “Big Banks, Big Overdraft Fees,” co-written with The Frontier Group, include the following:

• Through the first three quarters of 2016, 626 large banks reported collecting $8.4 billion in revenue from overdraft and NSF fees, an increase of 3.6 percent over the same period in 2015.
• Ten banks account for 67 percent of reported overdraft/NSF revenue. The 10 banks that collected the most overdraft revenue through the first three quarters of 2016, in order, were: Chase Bank, Wells Fargo, Bank of America, TD Bank, U.S. Bank, PNC Bank, Suntrust Bank, Regions Bank, Branch Banking and Trust, and Woodforest National Bank.
• The 10 banks that collected the most overdraft/NSF revenue per account through the first three quarters of 2016, in order, were: Ameris Bank (based in Georgia), ACNB Bank (Pennsylvania), Armed Forces Bank (Kansas), Woodforest National Bank (Texas), BankPlus (Mississippi), First National Bank Texas – First Convenience Bank (Texas), Ocean Bank (Florida), Planters Bank (Mississippi),  Gate City Bank (North Dakota), and First Community Bank (Virginia).
• Banks supervised by the CFPB collect less overdraft fee revenue per account. All banks are subject to the CFPB’s rules but banks with more than $10 billion in assets are also supervised, or examined, directly by the CFPB, a new federal agency created for the sole purpose of protecting consumers in the financial marketplace. In the first three quarters of 2016, 94 banks under CFPB supervision that reported fee revenue collected $17.27 in overdraft revenue per account, compared to $21.36 per account for the 532 other banks that reported revenue. [Banks with less than $10 billion in assets are examined by their “charter class” regulator, either the OCC, the FDIC, the Federal Reserve or the National Credit Union Association.]
• In Maryland, Bank of America had the most complaints to the CFPB in the category most closely linked to overdrafts, “Problems of Funds Being Low.”

“It’s clear from these findings that the CFPB works, and it works for consumers,” added Scarr “Congress should reject efforts from banks, payday lenders and debt collectors to weaken the CFPB.”

In 2010, regulators announced new Overdraft Protection Rules. The rules prohibit banks from allowing overdrafts on debit and ATM transactions unless a consumer has affirmatively opted-in or said “Yes.” The CFPB has expressed concerns over marketing of overdraft protection products and continues to study the problem. Consumers can still face overdrafts on checks or automated recurring payments.

“Many consumers can cut their exposure to overdraft fees by opting out of “standard overdraft protection,” which allows large overdrafts even on small transactions with debit cards,” added Scarr. “Would you rather have your card declined at a coffee shop or pay a $35 fee for a $3 latte so check out Maryland PIRG’s overdraft fee tips.