Banks Lower Overdraft Fees as Consumers Choose to Opt-In

Moebs Study Shows 6% Decrease in Price and 75% Consent to Overdrafts

LAKE BLUFF, Ill.--()--The median price of overdraft protection fees fell six percent, from $28 in July 2010 to $27.50 by late November 2010, according to Moebs $ervices. The data is reflected in the economic research firm’s latest survey of 2,265 banks and credit unions the firm monitors. “This decline of six percent is the first time in more than 25 years that the price of an overdraft dropped,” said Michael Moebs, economist and CEO of Moebs $ervices. “Contrary to earlier predictions, these numbers demonstrate consumers respond favorably to lower priced fees.”

Nationally, the data shows community banks, and credit unions lowered the price of their overdraft fees, while large Wall Street banks remained high at a median price of $35, according to Moebs. “Large banks with over $50 billion in assets, experienced a two percent loss of market share,” explained Moebs. “These banks did not receive the same high percentage of consumers opting-in for overdraft protection, and as a result, smaller community banks and credit unions are grabbing market share from the big banks.”

Overdraft Price
Price:  

Nov
2010

 

July
2010

 

June
2009

National   $27.50   $28.00   $26.00
East   $25.00   $29.00   $25.00
South   $29.00   $30.00   $29.00
Midwest   $26.50   $27.75   $25.00
West   $25.00   $27.00   $25.00

Source: Statistical Sample of 2,488 depositories taken 11/22/10 - 11/26/10 by Moebs $ervices, Inc.

 

Consumers view Overdraft Protection as a Safety Net

In the past two years the Federal Reserve issued regulations requiring banks and credit unions to obtain consent from existing users and all new users for debit card overdrafts and overdrafts at ATMs by August 15 2010. About 75 percent of the 130,000,000 consumer checking account holders gave consent according to research by Moebs $ervices. “More than 97 million consumers with checking accounts sent a strong message that they want overdraft protection,” affirmed Moebs. “The consumer no longer views overdrafts as a penalty like a parking ticket, but as a safety net. This is especially true since almost 100 percent of those using overdrafts, 10 or more times in a year, and over 50 percent of those who never overdraw their account, opted-in for overdraft protection.”

“In light of the added overdraft regulation, overdraft protection fees are coming down and consumer consent is high. This is a dramatic statement by American checking account holders that they want overdrafts, view them as a safety net in these difficult economic times, expect and appreciate a lower price, and the market is listening and adjusting,” said Moebs.

About Moebs $ervices, Inc.

Since 1983, Moebs Services, located in Lake Bluff, Illinois, has been collecting primary empirical data about financial institutions’ services, pricing, operating expenses and financial condition and analyzing the data in a counter intuitive manner, which provide solutions making sense. For more info please visit www.moebs.com

Contacts

Harden Communications Partners
John Lopez, 510-635-4150
JLopez@hardenpartners.com
Pat Harden, 510-635-4150
PHarden@hardenpartners.com

Release Summary

A new survey conducted by Moebs services has found that the median price of overdraft fees has dropped 6% from 2009 to 2010, and that 75% of consumers have opted in to overdraft protection.

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Contacts

Harden Communications Partners
John Lopez, 510-635-4150
JLopez@hardenpartners.com
Pat Harden, 510-635-4150
PHarden@hardenpartners.com