LAKE BLUFF, Ill. (12/10/13)--Banks' income from overdraft fees rose 1.6% to an annualized $31.8 billion during third quarter, suggesting that Americans had a harder time making ends meet, according to a Lake Bluff, Ill.-based financial research firm.
The report, by Moebs Services, said the average consumer overdrew a banking account 7.1 times, compared with seven times during second quarter (American Banker Dec. 6). The average overdraft fee remained the same--$30 for overdrawing an account.
During the third quarter, consumers felt the impact from the federal government shutdown and from automatic tax increases that began in January, and as a result had a harder time balancing their checkbooks, said the report.
Although the fees impact consumers paying them, especially those paying higher overdraft fees at banks, the increase in revenue from the overdrafts won't significantly affect lenders' bottom line, said the report.
While banks have come under heat for charging higher fees for overdrafts in order to generate income, often at the expense of their customers, credit unions take a different approach. Credit unions offer overdraft services, often at a lower cost, as a convenience to assist members who occasionally may need an overdraft buffer if they make an error in calculating their account balance.