The average overdraft fee in the US has hit a record high
- The average overdraft fee in the US has hit a record $33.47.
- And easing up on overdraft fees during the ongoing coronavirus crisis could boost customer satisfaction, as many still face financial uncertainty.
- Insider Intelligence publishes hundreds of research reports, charts, and forecasts on the Banking industry with the Banking Briefing. You can learn more about subscribing here.
The average fee of $33.47 in 2020 marks an $0.11 increase over last year, according to a study from Bankrate, and it's also highest level in the past 22 years included in the study.
Meanwhile, checking account fees are trending in different directions based on whether they yield interest: The average interest-bearing checking account fee has hit a record high—at $15.50 per month—as has the average balance required to avoid those fees, at $7,550. But the average monthly fee for non-interest checking accounts is at a six-year low of $5.27, and 47% of those types of accounts carry no monthly fee at all.
Rising overdraft fees coincide poorly with the ongoing coronavirus crisis and its economic impact. As a relief measure for customers at the onset of the pandemic, five of the top 10 consumer banks in the US waived overdraft fees completely. But as these concessions are rolled back, record-high fees are still an issue for consumers, especially given the still-uncertain financial situations of many.
To make matters worse, the burden of overdraft fees tends to fall more heavily on vulnerable customers: Just 9% of account holders paid for a whopping 84% of overdraft fees in 2019, and those customers tended to have low balances already, averaging less than $350, per data from the Center for Responsible Lending cited by The New York Times.
As overdraft fees continue to climb, giving clients a break on them could be a way to shore up customer satisfaction—especially for big national banks. The financial toll of the pandemic on banks makes it unrealistic to suspend overdraft fees for the long term, but instituting an overdraft cushion could help convey that banks are still dedicated to easing customers' financial burdens amid the crisis, while downplaying the importance of maximizing profits.
National banks may have the most to gain from an approach of this nature: 20% of US customers who had recently switched to a national bank registered a frustration with their bank nickel-and-diming them on fees, compared with only 11% of customers who had recently switched to a regional bank, per a March R/GA study.
Want to read more stories like this one? Here's how you can gain access:
- Join other Insider Intelligence clients who receive this Briefing, along with other Banking forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client
- Explore related topics more in depth. >> Browse Our Coverage
Are you a current Insider Intelligence client? Log in here.
Learn more about the financial services industry.
Source: Read Full Article