Survey: Las Vegas has second highest overdraft fee charges

The Las Vegas region is tied for second when it comes to how much banks and credit unions charge customers for overdrawing their checking account, according to a survey by Moebs Services.

The median overdraft fee charged by local banks and credit unions is $33.50, the Lake Bluff, Ill. –based economic research firm reported. That tied Philadelphia for second on the list. Tampa at $34 per transaction topped the list. San Francisco, at $25, was the lowest.

“You were like Disneyland,” Michael Moebs, economist and CEO of Moebs Services, said Tuesday. “Some felt if you overdraw your checking account in Las Vegas, their (casino) winnings will cover the fees. The Great Recession changed all that.”

Nationally, the median overdraft fee charged by banks was $30, unchanged from 2012. The median fee charged by credit unions was $28 up from $27 last year.

Moebs said falling overdraft volume is forcing credit unions to increase prices to maintain revenue. Despite the increases by credit unions, their overdraft fees remain $2 lower than banks, according to the report.

Overall, industry revenue fell in the first quarter to an annualized total of $31.1 billion.

Moebs attributed the decline to seasonality and attempts by consumers in the face of higher taxes to limit their bank fees.

Moebs expects revenues to increase to $37.3 billion by 2018, which will mark a return to the income levels posted in 2009.

“By the end of the decade, we will be up to $40 billion,” the economist said.

Banks’ increasing reliance on overdraft-fee income, prompted the Federal Reserve to require financial institutions to have their debit card holders opt into overdraft protection programs beginning in 2010.

How much financial institutions earn from overdrafts and non-sufficient funds fees is a matter of debate. A study by the Consumer Financial Protect Bureau estimated consumers paid $12.6 billion in fee in 2011, and that overdraft and NSF fees generate 61 percent of consumer checking-account revenue.

Moebs Services looked at overdraft charges at 2,906 financial institutions nationwide, reporting fees as of June. The survey found Delaware is the highest for a state at $34, while Kansas, at $25, was the lowest.

A look at overdraft fees posted online by local banks and credit unions found Nevada State Bank and Silver State Schools Credit Union charged $32. One Nevada Credit Union, Bank of America and Wells Fargo charged $35.

Moebs noted that overdraft fees were larger at bigger financial institutions. For example, banks with more than $25 billion in assets had a median overdraft fee of $35, while those institutions between $5 billion and $25 billion had a median fee of $33.

Those institutions between $500 million and $5 billion were $30 and those under $100 million were $25, according to the report.

“The consumer who either occasionally or frequently overdrafts save substantially by going to community banks and credit unions,” said Moebs. “Shopping can produce big savings for the consumer.”

The median overdraft fee charged at banks has remained $30 for the past four years, while it has risen at credit unions from $25 to $28.

The West and Midwest regions still have lower overdraft prices with a median of $29 in comparison to the South and East regions, which have a median price of $30.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.