(C) Common Dreams
This story was originally published by Common Dreams and is unaltered.
. . . . . . . . . .
Responding to Reform: Overdraft in 2023 – Financial Health Network [1]
[]
Date: 2025-02
As reported in the FinHealth Spend Report 2024, total overdraft/NSF fees in 2023 are estimated to be $7.9 billion, a 19% decline from 2022’s estimate of $9.8 billion – and nearly 50% lower than 2019’s figure ($15.5 billion).4 Despite this continued contraction, however, survey data show remarkable stability in the reported incidence of overdraft. Among households with checking accounts, 17% reported paying an overdraft or NSF fee in 2023, the same as 2022.5, 6
Similarly, the number of reported overdrafts broadly stayed the same between 2022 and 2023, with Financially Vulnerable households far more likely to report high volumes of overdrafts.7 Overall, 9% of overdrafting households reported more than 10 overdrafts in 2023, unchanged from 2022.8
We also continue to find that while many overdrafts are due to an accidental overdraw, a minority of households intentionally overdraw their accounts, knowing they would incur a fee. When thinking about their last overdraft, 51% of respondents said, “I did not realize my account balance would not cover the expense,” statistically the same as last year. About a quarter (26%) took a gamble – saying that they knew their account balance was low, but thought there was a chance it would cover the expense – while 18% said they knew their account balance wouldn’t cover it. These findings, too, are in line with last year’s figures, as is the fact that frequent overdrafters (those who overdraft 10 or more times), low-income households, and Financially Vulnerable households are more likely to report that they were at least somewhat aware of a risk.
The reported transaction size that triggered the fee stayed flat, with about a quarter of respondents (24%) saying their last overdraft was on a purchase or payment of $25 or less. This is despite the increase in the size of fee cushions among numerous banks.9 Forty-five percent (45%) reported their last purchase that incurred an overdraft was $50 or less, unchanged from 2022.
Another key finding on consumer preference for overdraft remained unchanged from 2022. Sixty percent (60%) of overdrafters said that when they overdrafted most recently, they would have preferred to incur the fee and ensure the payment be processed. This preference is more common among those who overdraft more frequently.
[END]
---
[1] Url:
https://finhealthnetwork.org/research/responding-to-reform-overdraft-in-2023/#:~:text=Despite%20this%20continued%20contraction%2C%20however,2023%2C%20the%20same%20as%202022.
Published and (C) by Common Dreams
Content appears here under this condition or license: Creative Commons CC BY-NC-ND 3.0..
via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/commondreams/
