Today's overdraft practices are designed to drive up the fee revenue of banks and credit unions and not to discourage customers from overdrawing their accounts. Our report shows that fees are climbing very quickly and affecting millions of Americans every year.

  • Over 50 million Americans overdrew their checking account at least once over a 12 month period, with 27 million accountholders incurring five or more overdraft or non-sufficient funds (NSF) fees.
  • Banks and credit unions collected nearly $24 billion in overdraft fees in 2008.
  • Overdraft fee income for banks and credit unions rose 35 percent from 2006 to 2008.

It is inappropriate for our nation's banks and credit unions to rely on fees unfairly stripped from their customers' accounts.

The runaway cost of this practice and our current economic situation make overdraft reform urgent.

The most common trigger of overdraft fees are small debit card transactions that could easily be denied for no fee. This is how things used to work, and according to a 2008 nationally representative survey, it's what the large majority of people prefer.

Thousands of bank and credit union customers have complained to federal regulators that overdraft policies are unfair. Customers typically haven't explicitly agreed to these high-cost overdraft loan programs but are automatically enrolled by their bank. When consumers try to avoid these abusive fees, they often find themselves tripped up when, for example, institutions needlessly delay posting deposits or process purchases from largest to smallest to purposely generate multiple overdrafts. And because overdrawing an account by just a few dollars triggers a fee averaging $34, cash-strapped households—particularly younger adults and seniors on fixed-incomes—often are thrust even further into debt by this overdraft "protection."

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