Report: Bank overdraft/NSF fee revenue sees significant drop compared to pre-pandemic levels

Bank overdraft/non-sufficient fund fee revenue has significantly declined compared to pre-pandemic levels, according to a CFPB report this week. The third quarter of 2022 is down more than 40% compared to third quarter of 2019, suggesting $5 billion reduction in fees on annual basis, the bureau stated.

Since late 2021, several banks have announced changes to their overdraft programs that have been expected to reduce overdraft/NSF fee revenue. The CFPB analysis finds that bank overdraft/NSF fee revenue:

  • was 43% lower in the third quarter of 2022 than in the third quarter of 2019 before the COVID-19 pandemic onset, suggesting $5.1 billion less in fees on an annualized basis;
  • was 33% lower over the first three quarters of 2022 compared to the same period in 2019; and
  • has trended downward in each quarter since the fourth quarter of 2021.

“At the same time, we have not observed correlating increases in other listed checking account fees, which suggests that banks are not replacing overdraft/NSF fee revenue with other fees on checking accounts,” the report states.

The bureau stated that it will continue to track overdraft/NSF fees, and consider rulemaking activities related to these fees.

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