Consumer Financial Protection Bureau

CFA Welcomes CFPB Research on Overdraft and Calls for Strong Regulatory Action to End Abusive Overdraft Fees

Overdraft Fees Cost Consumers Greatly, Especially Those That Can Least Afford It

Washington, D.C. — Yesterday, the Consumer Financial Protection Bureau (CFPB) published illuminating research on overdraft fees illustrating how reliant banks are on overdraft and non-sufficient fund (NSF) revenue. The CFPB reported that overdraft and NSF fee revenue reached an estimated $15.47 billion in 2019, and that three of the top-ten banks (JPMorgan Chase, Wells Fargo, and Bank of America) brought in 44% of the total.

“This welcome research yet again illustrates the need to put an end to abusive overdraft fees—especially given that these fees are borne predominately by those who can least afford them,” said Rachel Gittleman, Financial Services Outreach Manager at Consumer Federation of America. “Consumers cannot wait for banks to individually put an end to this practice, like Capital One announced yesterday. The cost is just too high—overdraft fees can cost consumers hundreds in a single day and can push people out of the banking system, exacerbating financial exclusion.”

Earlier, the CFPB found that nearly 80% of all overdraft revenue is borne by less than 9% of consumer accounts whose account balances average $350 paying 10 or more overdrafts per year. The average overdraft fee is nearly $35, while the most common transaction to trigger overdrafts are debit card transactions and the overdrafts average for those transactions is just $20, according to the Center for Responsible Lending.

“Although the CFPB plans for cracking down on illegal overdraft practices through supervision and enforcement are welcome, the CFPB should enact a rule requiring all banks and credit unions to end this destructive practice that does far more to hurt consumers than to help,” Gittleman continued.

The CFPB’s report was released shortly after a Federal Deposit Insurance Corporation report showing that banks are on pace to exceed their pre-pandemic profit levels—with earnings up 36% in the third quarter of 2021 from the previous year.