Overdraft fees have reached their highest level since 2009, which was at the end of the Great Recession. Consumers paid $34.3 billion in overdraft fees during 2017 compared to $33.3 billion in 2016, The New York Post reported.
Despite the increase, consumers aren’t, in fact, overdrawing their accounts. Instead, Moebs Services says the uptick was caused by credit unions increasing their overdraft fees. Overall, average overdraft fees at banks have risen from $20 in 2000 to $30 in 2017. Over that same timeframe, the average overdraft fee at credit unions has increased from $15 in 2000 to $29 in 2017.
Even so, consumers must opt in to be able to overdraft. And, since 2010, financial institutions have been mandated to provide consumers with their overdraft policies, along with alternatives to overdrafts and the fees associated with them.
The news comes as overdraft fees presented a cost of $15 billion to U.S. consumers in 2016, according to a report from the Consumer Financial Protection Bureau (CFPB) on the impact of bouncing checks in American finance.
Overdraft fees increased 2.2 percent in 2016 from 2015, with $11.41 billion going to U.S. banks, reported CNN. All told, the CFPB estimates $15 billion was charged by large banks, small banks and credit unions. Only banks with assets that surpass $1 billion have to report the money earned from bounced checks or when there isn’t enough money in an account to cover a payment, noted the report.
“Consumers living on the edge can find themselves racking up numerous overdraft charges,” CFPB director Richard Cordray said during a press call covered by CNN in 2017. “Despite recent regulatory and industry changes, consumers with low account balances and little margin for error continue to pay significant overdraft fees.”
Since 2010, the Federal Reserve has been trying to curb the issue by requiring banks to get customers’ permission to cover a transaction. While that resulted in a reduction of the fees, some of the poorest Americans are still getting hit the most, according to Cordray. U.S. consumers who are hit with the fees pay around $450 each year, the CFPB noted.