Just as regulators are considering a new round of crackdowns on the controversial fees
Overdraft fees—the scourge of the banking consumer—are back in vogue. According to data collected by the Federal Deposit Insurance Corporation, overdraft fees collected by big banks are up 6% from a year ago, the Washington Post reports.
In total, the 600 banks included in the data set compiled by the FDIC collected a total of $2.7 billion in overdraft fees in the first quarter this year. Wells Fargo saw the biggest increase of any bank, with a jump of 16% in the amount of money collected in overdraft fees.
A 2015 study by financial data analyst Moebs Services found a similar trend. For the year ending last June, Moebs reported, banks took in a total of $32.5 billion in overdraft fees—the most in any year since 2010, when new rules went into effect that were supposed to limit the amount banks could charge customers for overdrawing their accounts.
(As noted in the Washington Post, the FDIC only began gathering data on overdraft fees last year, so the current jump could be simply a blip or a reflection of banks having more customers.)
The penalties for withdrawing more money from a bank account at an ATM or with a check than is available in the account have become increasingly controversial, as consumer advocates say they are a burden that weighs heaviest on the poor. Since 2010, regulators have required banks to get consent from customers before charging overdraft fees. Earlier this year the Consumer Financial Protection Bureau asked banks to offer accounts that don’t levy overdraft fees, and the agency is currently considering further regulation on the practice.
“Over the years, overdraft programs have become a significant source of industry revenues, and a significant reason why many consumers incur negative balances,” CFPB Director Richard Cordray said in February. “Too many problems with overdrafts can cause people to give up on the banking system or force them out of it altogether.”
To keep from getting hit with excess fees, make sure you’re not signed up for overdraft “protection,” the feature that allows banks to change you as much as $30 (and sometimes more) if a debit purchase puts you in the red. You can also enable email or text alerts when your balance falls below a certain amount. Or better still, check out these banks that don’t charge overdraft fees at all.