CFPB: Overdraft, NSF Fee Income Dropped 24% in Past Two Years
Decrease saved the average household that overdrafts $185 each year
Overdraft and nonsufficient fund fee revenue at the nation’s banks dropped 24% between 2022 and 2023, the Consumer Financial Protection Bureau reported this week.
Income from those fees has decreased by $6.1 billion since before the pandemic, saving the average household that overdrafts $185 each year, the agency said in a “Data Spotlight.”
The CFPB has lumped overdraft and NSF fees in the category of “junk fees” that the agency believes should be limited. The CFPB has proposed subjecting overdraft fees to the same regulatory requirements as consumer loans at the nation’s largest banks and credit unions. The bureau has solicited comments on a cap on those fees.
“Despite these declines, reporting banks collected $5.8 billion in overdraft/NSF fees from their customers in 2023,” the CFPB said. “Though many banks have made a range of changes to their policies in recent years, some banks continue to charge overdraft fees as high as $37 each.”
Credit unions and banks have said that they will have to increase other fees to offset the decrease in overdraft and NSF fees. That has not occurred, the CFPB reported. “Evidence continues to suggest that financial institutions are generally not increasing other checking account fees to compensate for reduced overdraft/NSF revenue,” the agency said. “Across all reporting banks, combined account maintenance and ATM fees remained flat from 2019 to 2023.”
Credit unions were not included in the report, since credit unions have not been required to report their overdraft and NSF income. Banks with more than $1 billion in assets have been required to report their overdraft and NSF fees since 2015.
Starting on March 31, credit unions with more than $1 billion are required to report their overdraft and NSF income. America’s Credit Unions has said that data is not subject to the Freedom of Information Act because it is confidential business information. As a result, that data should not be made public, the group argued. The trade group has estimated that more than 400 credit unions will be required to report their overdraft and NSF income under the new National Credit Union Administration policy.