U.S. banks collected $1.6 billion in overdraft fees during the third quarter, a 9.4% increase from the previous quarter and the highest quarterly total in four years, according to Reuters calculations reported Friday.
Overdraft fees are charges assessed when a checking account does not have enough money to cover a transaction. The increase may reflect more frequent account shortfalls among consumers, although the figures do not establish why fee revenue rose at each bank. Economists cited in the report said the jump could be an early warning sign of deteriorating consumer financial health.
Large banks account for a significant share
JPMorgan Chase and Wells Fargo together collected $590 million in overdraft fees during the quarter, Reuters reported. Bank of America’s overdraft-fee revenue totaled $55 million.
| Bank or group | Overdraft-fee revenue in the third quarter |
|---|---|
| JPMorgan Chase and Wells Fargo | $590 million combined |
| Bank of America | $55 million |
| All banks in the report | $1.6 billion |
The reported totals vary sharply among institutions. Citi eliminated overdraft fees in 2022, according to the report. At some regional banks, including First-Citizens, overdraft-fee revenue was rising faster than at other institutions, Reuters said.
Fee revenue is tied to account activity
Overdraft revenue can change when customers make more transactions that exceed their available balances, when banks alter fee policies or when account holders experience changes in income and expenses. The reported figures combine those possible factors rather than measuring a single cause.
The third-quarter increase also comes after years of scrutiny over overdraft practices. Banks have faced pressure from regulators, lawmakers and consumer advocates over fees charged when payments, withdrawals or other transactions exceed the money available in an account. The report, however, does not describe a new federal rule or enforcement action connected with the latest figures.
- $1.6 billion in overdraft fees were collected during the third quarter, according to Reuters calculations.
- The quarterly total was 9.4% higher than in the previous quarter and the highest in four years.
- Economists cited in the report said the increase could indicate worsening consumer financial health.
