Overdraft fees cost U.S. consumers $15 billion in 2016, according to news from the Consumer Financial Protection Bureau (CFPB), the government watchdog that is out with a new report on the impact of bouncing checks in American finance.
Overdraft fees increased 2.2 percent last year 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 ones 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 on a press call last week covered by CNN. “Despite recent regulatory and industry changes, consumers with low account balances and little margin for error continue to pay significant overdraft fees.”
Cordray noted the the average amount that causes the fees is around $24 more than the average $34 banks charge for an overdraft occurrence.
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, Cordray said, according to the report. U.S. consumers who are hit with the fees pay around $450 each year, the Consumer Financial Protection Bureau noted.
The Consumer Bankers Association Head Richard Hunt told CNN that the group wants to work with the CFPB on the issue but noted the industry already provides consumers with “clear, concise procedures for opting into overdraft services.”
Hunt noted a 2015 survey that showed 1 percent of those who took part in the survey found the overdraft opt-in process confusing.