The death of overdraft fees? Not quite.

The connotation of the word, fee, has always been bad. The same could be said when you add overdraft in front of it. Death to overdraft fees has been a common theme in the news lately. Notably, a handful of mega banks are eliminating them while others are instituting other forms of low balance warnings. While the overarching idea of overdraft fees are changing, they aren’t going away completely, and four key advantages of keeping them around speak for themselves.

Four Benefits of Overdraft Fees

1. Providing Liquidity for Consumers

Overdraft fees allow financial institutions to provide liquidity for their consumers. As a practical, common example, a consumer is at the grocery store to purchase food for their family. Upon checking out, the consumer’s payment is declined due to insufficient funds, resulting in the consumer either leaving empty-handed or only with the bare essentials. Instead, with overdraft protection, the consumer can pay for their groceries, even with limited funds, because the financial institution has risk protection in place to cover the purchase.


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