Revenue from overdraft and non-sufficient funds (NSF) fees for banks and other financial institutions was down by nearly half in the last quarter of last year compared to pre-pandemic levels, the federal consumer financial protection agency said Wednesday.
The Consumer Financial Protection Bureau (CFPB), in a report, also said its review of revenue “suggests” a more than $5.5 billion reduction in the fees on an annual basis going forward. Still, the agency said, the fees totaled $7.7 billion in 2022.
The agency noted that the fee revenue for the fourth quarter of 2022 was about $1.5 billion lower than the fourth quarter of 2019, the last quarter before the start of the coronavirus crisis. CFPB said that is 48% lower than that collected in 2019 and extrapolated that into an annual reduction of more than $5.5 billion in coming years.
“This decrease suggests average annual savings of more than $150 per household that incurs overdraft or NSF fees; many households have saved much more,” the agency said.
The downward trend in overdraft/NSF fees, the agency said, was evident in every quarter of 2022. Quarterly revenue approximated $2.2 billion, $2.0 billion, $1.9 billion, and $1.6 billion for the first through fourth quarters, respectively, according to CFPB. “This quarterly trend further indicates that overdraft/NSF policy changes are impacting bank revenues – especially since, historically, overdraft/NSF revenues in quarters three and four have typically been higher than in quarters one and two,” the agency reported.
And although the overdraft/NSF fee revenue is declining, CFPB asserted, financial institutions apparently are not turning to other fees to make up the deficit. The agency said it did not find increases in other checking account fees, such as account maintenance and ATM charges, noting that revenue from those charges remained remained flat from 2019 to 2022.
Overdraft/NSF revenue down nearly 50% versus pre-pandemic levels
Leave a Reply