US banks are set to earn a record 38.5 billion dollars this year from overdraft fees charged to customers whose spending has exceeded their bank balance, the Financial Times reported on Monday.
Citing a study by research company Moebs Services, the British newspaper said the fees were mostly collected from poorer customers who are struggling to make ends meet in the midst of a global economic crisis.
Moebs said 90 percent of the overdraft fees collected were levied on just 10 percent of the 130 million checking accounts in the United States and that banks have raised the cost of the punitive fees.
“Banks are returning to a fee-driven model and overdraft fees are the motherlode,” company founder Mike Moebs told the newspaper.
Overdraft fees account for more than three-quarters of all fees charged by banks, Moebs found, with big banks such as Citigroup, Bank of America, Wells Fargo and JPMorgan Chase charging the highest fees.
Nationwide, the median cost of an overdraft fee stands at 26 dollars, up one dollar this year. At the nation’s biggest banks, the median fee is 33 dollars.
At Bank of America, a client overdrawn by just six dollars could incur a 35 dollar overdraft fee that can be levied up to ten times in a single day, the Financial Times said.
A senior banker told the newspaper that the fees “are there for a reason, we take on a lot of risk.”
© AFP
Add A Comment