LAKE BLUFF, Ill. (12/18/12)--After a sharp decline that began during the financial crisis, overdraft revenue at financial institutions is starting to pick up as consumers begin using their debit cards more, according to new data.
Annualized overdraft revenue for third quarter was $31.8 billion, a 2% increase over third quarter 2011, according to Lake Bluff, Ill.-based Moebs Services (American Banker Dec. 14).
In third quarter of 2008, annualized overdrafts revenue hit at peak at $37.6 billion, said the fees consulting firm. That revenue dropped by 1% in 2009, 9% in 2010 and 8% in 2011.
Banks began reducing overdraft fees when they came under criticism for manipulating the order of overdrafts to maximize their fees, said the Banker.
The recent growth of debit card use among consumers may be a factor in the uptick in overdrafts, said the Banker. On an annualized basis, U.S. consumers made 52.6 billion debit card transactions during third quarter, up 11% from third quarter last year.
The increase in card use has helped offset some interchange revenue banks lost when the Dodd Frank Act became effective last year. Just before the price caps went into effect last year, banks with more than $10 billion in assets in third quarter 2011, earned $19.9 billion annualized in debit swipe fee revenue. Third quarter this year they earned $18.5 billion, a 7% decrease.