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Overdraft Revenue Inches Up in 2018

Overdrafts are NOW elastic. Raising price will lower revenue by reducing consumer usage.
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Credit Union OD Revenue Soars, While Bank OD Revenue Declines

Lake Forest, IL (March 27, 2019) “All that glisters is not gold . . .” Shakespeare, Merchant of Venice. Total overdraft revenue increased in 2018 by 0.50% to $34.5 Billion, yet hidden behind this glister is revenue for banks declining -0.73% and thrifts declining -1.83%, while credit union OD revenue soared +5.72% to $6.9B from $6.5B. The revenue uptick was caused by banks increasing OD price to $32 from $30, and CUs increasing to $30 from $29. In line with price changes, OD transactions decreased -6.93% for banks and -0.53% for thrifts. CU transactions increased +2.19% enough to stimulate an overall increase.
“Depositories have thought the elasticity of overdrafts, or price changes vs. volume changes on ODs, was inelastic – no connection between price and volume, yet this link is no longer true,” states Michael Moebs, Economist & CEO of Moebs $ervices and author of the 132nd quarterly, consecutive Overdraft Revenue Study in the United States.

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Written By: m.moebs
Date Posted: 3/27/2019
Number of Views: 122

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