You’re Probably Paying Less in Overdraft Fees Than You Used To

The Wall Street Journal has an interesting short piece about overdraft fees today, including some facts and figures I haven’t seen before. Here are the trends between 2009 and 2013:

  • Average number of overdrafts per year: down from 9.8 to 7.1
  • Total overdraft revenue: down from $37.1 billion to $31.9 billion
  • Average overdraft charge: up from $27.50 to $30 (in 2013 dollars)

That’s a decrease of nearly a third in the annual number of overdrafts per checking account. This is likely because of new regulations, and banks have responded by raising the average fee in order to recoup some of their lost revenue.

Overall, this is a net benefit. The reduction in the number of overdrafts per year can probably be attributed to legal and regulatory actions that have reined in or flatly banned some of the worst abuses: clearing large payments first, refusing to let customers opt out of overdraft protection, slowing down payment credits, and so forth. These were the most outrageous fees, and eliminating them has helped consumers even if banks have partially made up for it with higher fees. In inflation-adjusted terms, the average person is now paying $213 in overdraft fees each year, compared to $269 in 2009. It’s a start.