Number of U.S. overdrafts shown to rise in 2012

Fueled by increases in consumer demand and competitive market prices, overdrafts in the United States made a strong comeback last year, a study by Moebs Services, a Lake Bluff, Ill., economic research firm, shows.

For 2012, national overdraft revenue increased 1.3 percent to $32 billion from $31.6 billion for 2011. The $400 million increase came from a 1.2 percent increase in volume, the study found.

In the first quarter of 2012, overdraft volume fell to an 11-year low of about 1 billion overdraft transactions, or a 29 percent drop from the record high in third-quarter 2008, just before the recession.

In 2012, overdraft transactions increased 4.4 percent in volume.

“Despite regulation and legislation … consumers’ use of overdrafts shows no indication of going away, and is actually increasing,” author Michael Moebs said.

The study said credit unions have a national median price of $27 per overdraft while banks are $30 per overdraft nationally. When deposit size is taken into account, the difference can be significant.

Banks with assets between $5 billion and $25 billion charge on average
$34 per overdraft, while credit unions charge $25. With assets between $1 billion and $5 billion, the price difference narrows, with banks charging $31 and credit union $28 on average per overdraft.

In Southern Nevada, overdraft fees vary little between banks and credit unions.

Wells Fargo, Bank of America and One Nevada Credit Union charge $35, while Chase Bank charges $34 and Nevada State Bank charges $32 per overdraft.

The study found 38 million, or about 26 percent, of the 134 million consumer checking accounts are frequent overdraft users. These users are divided into about 20 million who use payday lenders and
18 million who use banks and credit unions.

“Rather than a bank or credit union, more consumers utilize payday lenders to cover an overdrawn balance in their checking account,” he said. “The reason is the median charge for a $100 advance is $16 … down from $17.50 in 2011.”

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
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