Are you still paying the overdraft fee?
Bank of America Bac,
said Tuesday it plans to eliminate its $35 “non-sufficient funds” fee next month, and will Reduce overdraft fee from $35 to $10, starting in May. A non-sufficient funds charge occurs when a payment bounces. Overdraft charges occur when consumers withdraw more than the agreed amount.
But there is still a long way to go. According to a report released last month, the industry took in $15.47 billion in overdrafts and non-sufficient funds in 2019. Consumer Financial Protection Bureau, Bank of America, JPMorgan Chase JPM,
and Wells Fargo WFC,
Those fees accounted for about 44%, it said.
Some people still rely on overdrafts despite the often high fees. Nearly a fifth (18%) of consumers at a bank or credit union said they were bothered by overdraft fees in December, a 14% increase in August, according to a Morning Consult Poll Released on Tuesday.
,Overdrafters are disproportionately the millennials, the parents and the ones experiencing income volatility.,
“A surprising similarity between overdrafters and the general population is their level of income,” the report said. “People who overdraft are more likely to report an annual household income of more than $50,000 and slightly more likely to report an annual household income of more than $100,000.”
Of those who said they paid overdraft fees, half were millennial consumers and 47% were parents with children under the age of 18. Nearly two-thirds (58%) of overdrafters surveyed made less than $50,000, while 27% made between $50,000 and $100,000, and 16% made above $100,000 annually. But they share a common characteristic: volatile income streams.
“More than one in five adults (21%) who have overdrafted since August reported receiving a payday loan, and roughly the same share either made a money order purchase or a bank or credit union. Reported to have cashed the check through the provider,” Morning Consult added. This is more than twice the rate of the general population.
The BoA’s decision will “provide much-needed relief for customers who can at least bear the burden of overdraft fees, and should lead other financial institutions to waive these charges that could benefit low-income, black and Latino Americans.” disproportionately affect,” said Mike Calhoun, president of the Center for Responsible Lending.