Banks Making BIG Money on Overdrafts... Fees Up 35%!
US banks billed their customers 24 billion dollars in penalty fees for overdrawing their accounts last year, a 35 percent increase over the previous year, a study has found.Rather than deny payment, most banks in the United States routinely approve transactions not covered by funds but charge customers an average fee of 34 dollars each time.
Fees are charged whether the overdraft is for five dollars or 50 dollars, under overdraft protection programs in which customers are automatically enrolled, the study found.
"Overdraft fees are most typically triggered not by checks, but by debit card transactions and ATM withdrawals that could easily be denied for no fee," said the study by the Center for Responsible Lending.
"These practices are especially alarming given that institutions automatically enroll consumers into this type of program, even when lower-cost forms of overdraft protection -- such as a formal overdraft line of credit or a link to a savings account -- are usually available," it said.
Some 51 million account holders have been billed for overdrafts at least once a year, and 27 million of them have been hit with the fees at least five times in a year, the study.
In 2009, experts expect fees to grow to 27 billion dollars.
Lawmakers have introduced a bill in Congress that would require banks to change their policies to allow consumers to decide whether or not to enroll in overdraft protection programs.
October 7, 2009 - posted at RogueGovernment