A 2011 report by Moebs Services, Inc. reveals a trend of increasing overdraft fees, a strategy recently employed by banks to recover losses in overdraft revenue due to new financial regulations.
Moebs Services, Inc., a financial resource company, has been tracking the rise and fall of overdraft fees for almost three decades. The 2011 study, released last Tuesday, showed that the median overdraft fee is $30, up by an unprecedented $2.50 since 2010, ChicagoTribune.com reports.
“In almost 30 years of collecting this data we have never seen an increase as high as $2.50 at one time,” Mike Moebs, the CEO and economist for Moeb Services, said.
Though overdraft fees are increasing, the banking industry has seen significant losses in revenue. Overdraft revenues for banks and other lenders fell by almost 11 percent to $29.5 billion in 2011, according to the study.
As overdraft fees have risen, consumers have overdrawn their bank accounts less often. The study found that the average number of overdrafts per household fell by 18 percent in 2011. But, Moebs said, this number does not mean that American consumers are now better off financially.
“Since the economy has been difficult for consumers since 2008, the need for short-term unexpected funds has not ceased for consumers,” Moebs said, according to ChicagoTribune.com. “They have simply opted to seek funds from alternative sources such as: family, pawn shops, friends, payday lenders, and loan sharks.”