Total deposit service charges decreased at an annualized rate of 2.9 percent, the first quarterly drop since the fourth quarter of 2011 and the second in two years.
Overdraft revenue reached $31.1 billion in the first quarter, compared to $32 billion in the fourth quarter of last year, $31.8 billion in the third quarter and $31.5 billion in the second quarter. Because the rates are annualized, overdraft revenue fell from $8 billion in the fourth quarter of last year to under $7.8 billion in the first quarter.
“Overdraft revenue is starting to act like a barometer of sluggish economy,” Moebs CEO Michael Moebs said. “With the net pay of Americans suffering a jolt under the Affordable Health Care Act’s provisions of increased taxes starting Jan. 1, savvy checking account users are fine tuning their finances and reducing expenses especially deposit service charges.”
Moebs said taxes and the “seasonal nature of overdrafts” led to the decrease in overdraft revenue. February and March are low months for overdraft fees because consumers are recovering from the holiday season.
“With the reduction of net pay right after the holidays, February and March moved up a month sooner, making the first quarter of 2013 bad,” Moebs said.