Bank Fees Up Again, Despite Government Intervention

For example, Fifth Third will pop consumers with a $37 overdraft fee after a $25 "initial overdraft" transaction fee for the first offense. In the past, the bank would charge a $33 fee for the second, third and fourth overdrafts over a one-year period. About two-thirds of big banks surveyed by the CFA engage in higher overdraft fees after the initial infraction.

The amount of the overdraft transaction is another springboard to higher fees, the CFA says. U.S. Bank is planning to charge $15 for any overnight overdraft transaction and $35 for any overdraft following the initial transaction, up from $10 and $33, respectively.

Another key area is unpaid overdrafts. Banks are really getting aggressive about tacking on extra fees for overdrafts that aren't covered by bank consumers. SunTrust Banks (Stock Quote: STI), for example, charges $36 per day after seven days of an uncovered overdraft transaction.

By upping the fee amounts for overdrafts, the CFA says that banks are operating very much like payday lenders, which extend credit to hard-up consumers and charge onerous interest rates and fees. The association calculates that a $100 overdraft at one large bank that went uncovered for two weeks would result in a 2,779% "coverage fee."

"Bank overdraft loans are a form of payday lending," Fox says. "Banks are charging staggeringly high rates for short-term borrowing when fees are computed the same way payday loans are calculated."

Such fees are particularly hard on consumers who can least afford to pay for overdraft costs.

"Banks should not be in the business of charging steep fees for small loans triggered by debit card sales and ATM transactions that can be denied at no cost to consumers," Fox says. "The extreme fee in relation to very small loans that must be repaid in just days to avoid more fees means that bank payday lending is particularly burdensome to consumers who are struggling to make ends meet."