Forbes stated, “Large U.S. banks plucked over $11 billion in overdraft fees out of their customers’ accounts in 2019, according to a new report by the Center for Responsible Lending (CPL). The organization analyzed overdraft related revenue of banks with assets of $1 billion or more as well as how those institutions have or have not modified their handling of overdraft fees during the Covid-19 pandemic. “Banks engage in a number of abusive practices that combine to drain massive sums from their customers’ checking accounts,” CPL concluded. “During the economic crisis caused by COVID-19, the devastating impact of overdraft fees will be only more pronounced.”

Overdraft Fees Facts:

• In 2019, banks with assets of $1 billion or more charged customers $11.68 billion in overdraft-related fees. These fees include both overdraft fees as well as non-sufficient funds (NSF) fees.

• Overdraft fees charged to customers increased $130 million from the previous year, 2018, and $500 million from 2015.

• 84 percent of the fees were paid by only nine percent of account holders. These individuals tend to carry low balances and have low monthly deposits; the average balance for this group was less than $350.

• CPL found that some of the hardest hit consumers paid a median of 37 overdraft fees each year, which equated to almost $1,300. This is also more than the $1,200 stimulus check that many individuals as part of the CARES Act.

• The top 20 fee-charging banks were responsible for $9.2 billion or 79 percent of the overdraft/NSF revenue.

• JP Morgan Chase JPM, Wells Fargo WFC, and Bank of America BAC received the most revenue from these fees in 2019. JP Morgan earned more than $2 billion alone with Wells Fargo and Bank of American earning $1.7 billion and $1.6 billion, respectively

Overdraft Fees Disproportionately Affect Most Vulnerable:

The vast majority of overdraft and NSF fees are borne by the most vulnerable customers and have the effect of driving them out of the banking system entirely. Moreover, “bank overdraft fees cause particular harm to low-income consumers and communities of color, who are already disproportionately excluded from the banking mainstream,” according to CPL.

This is particularly relevant during the coronavirus induced economic downturn. While the May job report released by the Bureau of Labor Statistics showed a decline in the unemployment rate, job gains went mostly to white workers. Black unemployment actually ticket up 0.1 percent and a record 19 percent of Latina workers were unemployed. “Bank overdraft practices cause many families severe financial distress in the best of times,” the CPL asserts in its report. “During the economic crisis caused by COVID-19, the devastating impact of overdraft fees will be only more pronounced.”

Overdraft Fees And Coronavirus:

With the coronavirus pandemic keeping many unemployed, financial strain could lead overdraft fees to spike. Given the disproportionate affect the fees have on vulnerable Americans, this could lead to increased financial hardship. The CPL report found that none of the 10 largest banks had committed to sustained overdraft fee relief during Covid-19. [MORE]