Bank overdraft fees top $37 billion in 2008
January 16th, 2009
A new study by management consulting firm Bretton Woods found that banks and credit unions collected a staggering $37 billion in non-sufficient funds and overdraft fees in 2008. This represents and increase of 97% over the past 3 years.
Furthermore, 80% of overdraft fees ae incurred by about 20% of households. These consumers paid an average of $1,472 in overdraft fees in 2008 ! According to the FDIC, the APR on these overdraft transactions can be 3,520 percent or higher based on a two week period.
Based on our calculations, these consumers could cut that expense by over 80% if they used short term loan products such as payday loans and short term installment loans instead of bank overdraft protection.
Short term loan products have received much criticism in recent years. While it’s true that these loan products are expensive, there is a growing body of evidence supporting what our customers already know: Short term loans can be a smart way to deal with financial emergencies and can even save money by avoiding more costly alternatives.
