OVERDRAFT FEES REMAIN FLAT

OVERDRAFT FEES REMAIN FLAT, Moebs Study Shows Wide Gap between Wall St. and Main St. OD Fees Persist Consent for Debit Card Overdrafts Keeps Increasing. 3/8/11

(Lake Bluff, IL) March 8, 2011 – The National median price of overdraft fees has plateaued at $28.00, holding steady at this level for the past seven months.  Since 2008 the median price has increased by approximately 11 percent.  Previously, large banks with over $50 billion in assets were the driving force behind the increasing cost of overdrafts. However, according to a recent study from Moebs $ervices, the economic research firm, large Wall Street and regional banks have kept their prices flat in recent months.   
 
“The only thing that has changed in past seven months is that community banks have increased their overdraft fee in anticipation of a sharp drop in revenue, due to the upcoming loss of interchange fees that is mandated in the Durbin Amendment to the Frank-Dodd bill,” said Mike Moebs, economist and CEO of Moebs Services.  “We expect credit unions will follow suit prior to the implementation of that provision of the bill.”
 
OD Fee Impact on Checking Accounts
Banks with greater than $50 billion in assets are shedding the average consumer checking account because of the loss of the fee revenue from overdrafts.  “These checking accounts are going to the Main St. financial institutions because of their lower prices,” stated Moebs.
 
The overall cost of operating a checking account appears to be a key factor driving the overdraft price.  “The Wall St. Banks appear to have lost revenue from overdrafts and now see costs of checking accounts greater than revenue,” Moebs pointed out. “We forecast banks with greater than $50 billion in assets will drop millions of consumer checking accounts by the end of 2011 to bring down their costs.  Community banks and credit unions which operate more efficiently are picking up these checking accounts,” commented Moebs.
 
Consent to Overdrafts Continue To Rise
This most recent Moebs Study included a survey of 1,000,000 checking accounts nationwide.  “The overall consumer opt-in rate for overdrafts on debit cards and ATMs is 75 percent and is rising,” pointed out Moebs.  “The consumer views overdrafts as a safety net and not a penalty anymore. In order to profitably leverage this service, banks should consider lowering overdraft fees.  Lower fees at community banks and credit unions reflect their better cost control.”
 
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About Moebs $ervices  
Since 1983, Moebs Services has been collecting primary empirical data about financial institutions’ services, pricing, operating expenses and financial condition and analyzing the data in a counter intuitive manner, which provides solutions that make sense.  For more info please visit
www.moebs.com

Written By: rnybeck
Date Posted: 3/23/2011
Number of Views: 7205

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