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  • 08.07.17

Overdraft fees cost Americans $15 billion last year

Overdraft fees have become big business for big banks. Last year, banks and other financial institutions charged Americans $15 billion in penalties for accounts with insufficient funds, according to a report published on Friday by the Consumer Financial Protection Bureau. In 2015, banks charged their customers $14.7 billion. Consumers who incur frequent overdraft fees—defined as more than 10 charges per year—tend to be financially vulnerable, with an average credit score of less than 600 and an average end-of-day balance of around $300. Over the span of a year, at a typical rate of $34 per zero-balance, they end up paying $450 or more in fees. Most overdraft fees are for low-value transactions. The median transaction size, the bureau says, is just $24.

[Chart: Bank Innovation]

AH