Overdraft Fee Revenue Falls as Banks Raise Overdraft Prices

FDIC & OCC OD “Guidelines” to Cost Consumers $2 Billion More a Year

LAKE BLUFF, Ill.--()--Consumers are receiving a late economic Christmas present from the FDIC and proposed by the OCC through their banks. As of July 1, 2011, in response to the FDIC “Guidelines” on overdrafts, banks have experienced substantial loss of fee revenue stemming from the added cost required to adhere to FDIC’s “Guidelines.” In response the banks have increased their prices for overdrafts by $2.50 a transaction according to new analysis from Moebs $ervices, an economic research firm located in Chicago.

“We examined over 2,500 banks and credit unions in June 2011, and again in November 2011, and were absolutely taken aback by the price increases caused by the FDIC and proposed OCC Overdraft Guidelines,” said Michael Moebs, CEO & economist at Moebs $ervices, “In almost 30 years of collecting this data we have never seen an increase as high as $2.50 at one time, especially in a five month period. When we asked banks why, the responses were all the same: to pay for the cost of overdraft regulation.” A $2.50 increase translates to $2 Billion a year more for consumers who overdraw their checking accounts.







ODs Per
Per Year


$29.5 $30.00 6.7
2010 $33.1 $27.50 8.2
2009 $37.1 $26.00 9.8
2008 $35.4 $25.00 9.8
2007 $34.6 $25.00 9.7
2006 $32.1 $25.00 9.0

*Thru 9/30/11 & Estimates thru 12/31/11
Source: Moebs $ervices Surveys & Analysis


Consumer Overdraft Activity Fell In 2011

The average number of overdrafts per household fell dramatically in 2011 to 6.7, according to the Moebs study. This is a decrease of 18 percent from the previous year, and a decrease of 31 percent from the peak in 2009. According to Moebs, this raises some real concerns. “Since the economy has been difficult for consumers since 2008, the need for short-term unexpected funds has not ceased for consumers. They have simply opted to seek funds from alternative sources such as: family, pawn shops, friends, payday lenders, and loan sharks.”

Overdraft Revenue Falls $3.6 Billion in 2011

Banks and credit unions collectively had a 10.9 percent reduction in overdraft revenue from 2010, a drop of $3.6 Billion, or 20.5 percent from the peak in 2009. With rates forecasted to remain flat for another 30 months, banks and credit unions have only two choices: charge more fees or reduce expenses. Since data shows that fee revenue is falling, banks and credit unions may be forced to take deep cost cutting measures including adding to the unemployment lines.

About Moebs $ervices

Since 1983, Moebs Services 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 provides solutions that make sense. For more info please visit www.moebs.com


Harden Communications Partners
John Lopez, 415-517-9760

Release Summary

Banks and credit unions in the US made $29.5 billion in overdraft fee revenue in 2011, a 10.9% drop from 2010, and 20.5% drop from 2009.


Harden Communications Partners
John Lopez, 415-517-9760