Are the Big Banks at Risk of Losing Overdraft-Related Fee Income?
A new report from the Center for Responsible Lending (CRL) shows that U.S. banks collected roughly $11.7 billion in overdraft-related revenue in 2019. That includes revenue from overdraft fees and non-sufficient funds (NSF) fees. Overdraft fees are charged to customers when transactions they make exceed the amount of money in their accounts, while non-sufficient funds fees are charged to customers when a check or electronic transaction bounces because of insufficient funds.
That $11.7 billion total is up 4.5% since 2015 and has increased every year since then. In 2019, nearly 79% of those overdraft fees were collected by the top 20 fee-charging banks.
This report is important because it shows the extent to which overdrafts and NSF fees affect banks' bottom lines. Now that there is some political momentum to get rid of this income stream, which bank stocks would be most heavily affected if legislation changed their ability to collect it?
Source Fool.com
