Banks Robbed Customers of Nearly $30 Billion in Overdraft Fees Last Year

Americans incurred $29.5 billion dollars in overdraft fees at the nation’s 12 largest banks and credit unions in 2011. That’s nearly $100 for every U.S. citizen, charged for overdrafting a checking account.

Overdraft fees, for those lucky enough to have never encountered them, occur when a bank withdrawal leaves a customer’s account below a pre-determined level. For some accounts, customers can draw the funds all the way down to zero and only incur a fee when the balance goes negative. Other accounts come with minimum balance requirements, forcing customers to keep at least, say, $500 or $1000 in the checking account at all times.

99% of the 237 unique checking accounts studied charged an overdraft fee of some kind, with the median penalty fee costing a customer $35. You might not know that, though. As the Pew study points out, the median length of a checking account disclosure statement – the fine print that most customers gloss over en route to opening their account – is a whopping 69 pages. That length is down from the 111-page average in 2010, but it’s still not exactly light reading. Take this Bank of America disclosure, for example; at 37,000+ words, it’s about 8,000 words longer than Steinbeck’s Of Mice And Men. Read more >>