Published May 17, 2012
If last year was any indication, checking account customers won't stand for things like debit card fees or monthly service charges. Witness national protests such as Occupy Wall Street and Bank Transfer Day, which prompted thousands of customers to flee large banks in favor of credit unions and online banks.
But with so many consumers in a hyper-vigilant state over some checking account fees, why are consumers still willfully paying billions in overdraft charges every year?
Overdraft revenue still considerable
Two years ago new federal rules took aim at exorbitant bank overdraft charges, which at many banks were inching toward $35 -- even when triggered by a small purchase like a cup of coffee. According to those regulations, banks, who were receiving more than $37 billion a year in revenue on overdraft charges, had to ask customers to opt-in to overdraft protection rather than enrolling them automatically.
You'd think those wary consumers would choose the money-saving route, right?
Wrong. According to a study by Moebs, an independent financial research firm, banks and credit unions earned $31.6 billion in overdraft fee revenue in 2011, just 4.5% less than the year before. What's more, Moebs reported that 77% of all bank customers are still using conventional overdraft protection.
The number of overdrafts, which peaked at 9.8 per account in 2008-2009, have fallen since the regulations began, but less than some analysts expected. The average annual number of overdraft charges per account was 7.4 in 2011. With an average overdraft charge of $29, that comes out to more than $200 a year per account.
Getting control of overdraft costs
If you find yourself still struggling with checking account overdraft charges, don't despair. Here are five ways to get a handle on this unnecessary drain on your checking account:
Make sure, too, that you find out how much your bank charges for overdrafts. If you feel you need the protection, you'll find the costliest overdraft charges may come from larger banks. The Moebs study found that banks with assets greater than $50 billion charge an average of $33.50 per overdraft, while banks with less than $100 million in assets charged an average of just $25.
The original article can be found at Money-Rates.com:
Why haven't consumers revolted against overdraft fees?