2016 marked a comeback for overdraft fees on checking accounts: Last year they generated $33.3 billion in revenue for banks and financial firms—the highest level since 2009.
Citing economic research firm Moebs Services, the Wall Street Journal reports that’s a rise of 2.5% from 2015 and 5.45% from 2011.
Consumers incur overdraft fees when they make a purchase or transaction that is larger than their checking-account balance, the Journal notes. Though banks will almost always cover the insufficiency, the consumer is still charged a fee for overdrawing in the first place—even if they can't afford it.
But in 2009, the Federal Reserve enacted a new rule that stopped banks from automatically charging overdraft fees if a consumer overdraws using a debit card at an ATM machine. According to the Journal, the rule intended to put a stop on the high fees—requiring banks to get permission from a consumer before they could be charged a fee for the transaction. Some fees, the Journal, can run as high as $45, though most are $30.
Banks initially opposed the rule, claiming that overdraft-fee revenue would fall, according to the Journal. But revenue has stayed at a steady $32 billion until 2015, before it started to increase.
Analysts cited by the Journal say the increase in overdraft-fee revenue is not unusual, since the rules have been in place for a while now, The also say it’s tied to new account growth.
Critics say many banks misleadingly present the service as mandatory, but David Pommerehn, associate general counsel and vice president at the Consumer Bankers Association, told the Journal that banks “have continuous exams with regulators and any hint of wrongdoing is something that would be picked on very quickly.”