The overdraft fees imposed by the banks are often too high and should therefore be reduced. An amount of $15 billion annually is a substantial sum, near half of what the U.S. spends every year on foreign aid. The typical $450 a year in fees is also a significant sum for many people, as a majority of Americans lack $500 in savings.
In 2016, U.S. consumers paid a total of $15 billion in fees for bouncing checks or overdrafting — which is when a customer tries to make a purchase without enough money in their account to cover the transaction — according to new data released by the Consumer Financial Protection Bureau.
All banks with assets over $1 billion must report how much money it brought in via bounced check and overdraft fees, according to CFPB. And this year the industry rang up at $11.41 billion. That’s up 2.2% from 2015, which was the first year banks began reporting total overdraft and bounced check fees to the CFPB.
Adding in its best guess for what smaller banks and credit unions charged, and CFPB says $15 billion is roughly the grand total.
These fees are particularly troublesome for cash-strapped Americans, CFPB Director Richard Cordray said on a press call Thursday.
The Federal Reserve decided to crack down on the issue in 2010 by mandating that banks must receive a customer’s explicit permission to approve a transaction when there are insufficient funds, and trigger overdraft fees. Otherwise, the transaction would simply be declined.
That year, the financial services industry was on track to make $38.5 billion on overdraft and non-sufficient fund fees, the economic research firm Moebs Services said at the time.
So, it appears that the fees have been curbed. But Cordray says data indicates some of the poorest Americans are still being hit hard by them.
He said customers that opt in and frequently overdraft “typically” wind up paying $450 per year in fees.