Overdraft Fees Remain Flat While Consent for Debit Overdraft Rises to 75%

Starting in August 2010, checking account customers had to “opt-in” for automatic overdraft protection on debit transactions because of abuses that resulted in the Federal Reserve Board modifying Regulation E –which implements the Electronic Fund Transfer Act. In a recent study “Consent to Overdrafts Continue To Rise,” economic research firm Moebs Services’ found that fees had stabilized and consent for approving automatic debit overdrafts was increasing.

“The only thing that has changed in past seven months is that community banks have increased their overdraft fee in anticipation of a sharp drop in revenue, due to the upcoming loss of interchange fees that is mandated in the Durbin Amendment to the Frank-Dodd bill,” said Mike Moebs, economist and CEO of Moebs Services.

This most recent Moebs Study included a survey of 1,000,000 checking accounts nationwide. “The overall consumer opt-in rate for overdrafts on debit cards and ATMs is 75 percent and is rising,” pointed out Moebs. “The consumer views overdrafts as a safety net and not a penalty anymore. In order to profitably leverage this service, banks should consider lowering overdraft fees. Lower fees at community banks and credit unions reflect their better cost control.”

For more information: http://www.cnbc.com/id/41952091