Overdraft Fees Are On the Rise

BY SIMON ZHEN

Banks continue to raise the fee that is charged when customers spend more than they have in their accounts. Since the end of 2012, the average fee for a $50 overdraft has increased from $33.70 to $34.90 at the 10 largest U.S. banks, according to a study by MyBankTracker.

Most recently, PNC Bank changed its overdraft fee to a flat $36. Previously, the bank had a tiered fee policy where customers paid $26 for the first overdraft over every 12 months and $36 for each overdraft thereafter during that period.

In August, U.S. Bank plans to overhaul its overdraft policy that will drive the average overdraft fee up to $35.20. The bank’s current policy charges $15 for each overdraft of $15 or less and $35 per overdraft of more than $15. The upcoming policy change will impose a flat $36 overdraft fee.

The slight changes in overdraft policies have helped boost the bank revenue brought in from overdraft fees. According to economic research firm Moebs Services, banks raked in $32 billion in overdraft fees in 2012, up from $31.6 billion in 2011. The rising trend comes after a 2010 regulation that required banks to receive customer consent to overdraw an account.

Not all is bad

Despite the fee hikes, more banks are willing to forgive small cases of overdrafts.

Six of the top 10 banks have implement policies that will waive all overdraft fees for customers who have a negative balance of $5 or less at the end of the business day.Chase and SunTrust Bank do not slap on an overdraft fee on transactions of $5 or less.

U.S. Bank will begin to impose a similar policy next month.

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