Overdraft fees jump amid regulatory shifts
By; Douglas Gillison
Reuters
WASHINGTON - Fourteen of the largest U.S. retail banks posted jumps in the income they generated from overdraft and bounced-check fees during the first nine months of the year, [2025] while two big banks reported sharp declines, according to a Reuters analysis.
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The data revels growing industry divergence on such fees at a time when broader economic and regulatory shifts make it more likely consumers will encounter them. It also highlights that some banks still rely on overdraft fees, despite industry promises to rein them in following political pressure enduring former Democratic Joe Biden's administration.
..... Reuters analyzed data on overdraft and "non-sufficient funds" charges for the 20 largest U.S. retail banks that report collecting such fees to the Federal Financial Institutions Examination Council, a regulatory panel. the 20 banks represent roughly half of all deposits at insured U.S. banks.
..... Overdraft and NSF fees income for the group ticked up 2% overall to $2.99 billion.
..... The changes mostly relate to overdraft fees, since most banks have phased out NSDF charges in recent years.
..... The increase in fee income coincides with congressional Republicans' move in May [2025] to scrap a Biden-era Consumer Financial Protection Bureau regulations that would have curtailed overdraft fees, which the CFPB estimated would have save depositors 45 billion a year.
..... The rule, which had been part of a Biden administration crackdown on "junk fees," would have come into force in October [2025] and effectively capped fees at $5, down from the typical $35.
..... Amid Democratic politicians pressure, some large banks modified their policies to help customers avoid the charges or dropped them altogether, even before the CFPB tired to cap them. With Republicans taking control of Congress this year, [2025] the industry saw an opportunity to kill that rule, arguing that such "price controls" could deny credit to depositors in need.
..... Aaron Klein, senior fellow at the Brooking Institution who has studied overdraft policies,s aid economic factors likely influence fluctuation in such revenue, with consumes more prone to becoming overdrawn when times are tough. but the picture would have been different had the CFPB's rule survived and banks geared up to comply with, he said.
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"When the watchdog was put to sleep, some institutions went back out on the prowl, and others have stayed kind of ding what they have been doing."
..... CFPB 2017 research found that nearly 80% of overdraft charges came from just 9% of accounts, which had only a few hundred dollars at any time. consumers Bankers Association CEO Lindsey Johnson said many consumers rely on overdraft to make ends meet and that the industry had worked to lower the fees.
..... "What matters most is ensuring consumers continue to have access to these protections as studies show overdraft services are deeply valued," she said.
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USAA Federal Savings Bank, which serves military personnel, reported the biggest year-on-year jump of 20%. At $78 million, the fees accounted for more than a fifth of tis net income over the nine-month period. In a statement, USAA said overdraft help customers meet short-term needs, and that its fees are lower than at most banks, but that it expected overdraft revenues to decline next year [2026] as he bank had recently raised the negative balance threshold for incurring a charge to $100 from $50.
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Citizne bank posted the second biggest jump at 17% and TD Bank, which has a large U.S. retail presence, posted a 14% increase, Such fee revenue was equal to 13% of TD's net income, the data shows. JPMorgan and Bank of America's fees increased 8% and 2% respectively.
..... TD referred questions to the CBA. A Bofa spokesperson said its overdraft revenues had fallen 97% since 209 and that the bank offers customers ways to avoid incurring such charges.
..... The increase was offset by a 10% fall at Wells Fargo, while Truist's fee income fell 22%.
..... Citizens and Wells Fargo declined to comment, while JPMorgan and Truist did not respond to request for comment.
..... Citigroup and Ally Financial scrapped overdraft charges in 2022 and 2021, restrictively. Both said they still offer overdraft services.
..... Despite the overall uptick, fees are well below historical norms, The whole industry in 2023 reported $6 billion in such fees, compared with $13 billion in 2019, according to CFPB data.
..... The numbers right now are night-and-day difference from when they used to be," said Christopher McGratty, head of U.S. bank research at KBW. "That's consumer protection working."