NEW YORK (MainStreet) — For all of those who don’t keep their eyes on the fluctuating world of fine print, there’s some good news and bad news on the bank fee front.
Industry analyst Moebs Services reports that bank fee revenues are down, so much so that financial institutions are raising fees to make up for the shortfall.
That approach has been effective, as a 2011 study from the Pew Health Group estimated that consumers paid out $38.5 billion in overdraft fees in 2011, with the average overdraft fee at $35. But now that the Federal Reserve has stepped in and required banks to make it easier for customers to opt out of overdraft protection, bank fee revenues are sliding downward again.
According to Moebs, which has different numbers than the Pew Study, total U.S. bank overdraft fees fell from $37 billion in 2009 to $29.5 billion last year. Seeing the handwriting on the wall, banks have hiked their overdraft fees by $2.50, which translates to $2 billion a year more for consumers who overdraw their checking accounts.
“We examined over 2,500 banks and credit unions in June 2011, and again in November 2011, and were absolutely taken aback by the price increases caused by the FDIC and proposed OCC Overdraft Guidelines,” explains Michael Moebs, CEO and economist at Moebs Services. “In almost 30 years of collecting this data we have never seen an increase as high as $2.50 at one time, especially in a five-month period. When we asked banks why, the responses were all the same: to pay for the cost of overdraft regulation.”