If you have not paid any overdraft fees in the last year, then you are apparently in the minority. According to a recent article by CNN Money, Americans have racked up billions of dollars’ worth of overdraft charges. Overdrafting is when a customer tries to make a purchase without enough money in their account to cover the transaction. Data released by the Consumer Financial Protection Bureau (CFPB) says that in 2016, U.S. consumers paid a total of $15,000,000,000 (that’s $15 Billion!) in fees for bouncing checks or over drafting.
In 2015, the CFPB started requiring all banks with assets over $1 billion to report how much money it generated via bounced check and overdraft fees. In 2016, the industry rang up at $11.41 billion, up 2.2% from 2015. Adding the smaller Banks with assets under a billion to the total brings the CFPB’s estimated total to $15 billion.
CFPB Director Richard Cordray said the average amount of money by which consumers overdraft is about $24, but banks often charge fees of around $34 for each overdraft incident. That in essence is a $34 dollar mistake. For many Americans who are living paycheck to paycheck that can be devastating.
I personally do not have overdraft protection and it would be my opinion that you opt out of overdraft protection as well. If you do opt out, and you try to make a purchase when there is not sufficient funds in your account to do so, the transaction would simply be declined. That would save you the $34 per mistake. According to Cordray, individuals that opt in and frequently overdraft, “typically” pay $450 per year in fees. That is approximately 13 mistakes a year and is equal to a mortgage and or car payment.
Do you find yourself overwhelmed by debt and are having difficulty paying your credit cards, medical bills or personal loans, not to mention your mortgage and vehicle loans, please call one of our conveniently located offices at Bond & Botes to set up a private consultation with one of our experienced attorneys.
We will analyze your situation and help you make the best decision possible to help you navigate your financial problems.