Average overdraft fee falls nearly $4, to lowest level since 2009

Dive Brief:

The average bank overdraft fee fell 11% to $29.80 from last year’s record high of $33.58, according to a Bankrate study released Tuesday. That’s the lowest level for the fee since 2009, when the charge averaged $29.58.
ATM fees were on the rise, with the average fee imposed by the ATM owner, combined with charges assessed by one’s bank, increasing to $4.66 per transaction — the highest sum in three years.
Customers needed an average of $539 in their non-interest checking account to avoid monthly service fees, Bankrate found. That’s up 6.4% from $507 last year, the first increase in average balance requirements since 2015. To avoid monthly service fees on interest-bearing checking accounts, users needed $9,658, down slightly from last year’s record of $9,897, according to the study. That is still significantly higher than 2020’s figure of $7,550, which itself was a record high at the time.

Dive Insight:

The $3.78 drop in the average overdraft fee was no doubt aided by a pair of large U.S.-based banks — Citi and Capital One — that eliminated overdraft fees within the past year.

Other banks, such as Bank of America, cut the amount they charged per overdraft.

Still others curbed nonsufficient funds (NSF) fees or instituted small-dollar cushions or grace periods to allow users to return their accounts to a positive balance.

Overdraft and NSF fees are still prevalent, though, with 96% and 87% of institutions surveyed still levying them in some way, respectively, according to Bankrate. The outlet surveyed 245 financial institutions between June 13 and July 1 to compile its data.

ATM fees that banks charge noncustomers, on the other hand, increased to a new high of $3.14, on average, Bankrate found. That figure varies by geography: Folks in Atlanta, for example, pay $5.38 — the highest among 25 metro areas Bankrate studied. That’s up from $5.23 last year. Los Angeles ranked lowest, at $4.21 — up from $3.90 last year.

Most banks continue to charge customers to house their money, with non-interest checking accounts most commonly charging $12 monthly service fees and interest-bearing checking accounts most commonly charging $25.

While 46% of non-interest checking accounts are free, 53% of non-interest checking accounts will waive fees based on certain transaction activities, including direct deposit and minimum account balance. Of these, 44% will waive fees solely based on direct deposits, up 3 percentage points since 2020. Bankrate found that 99% of non-interest accounts are free or can become free easily, provided certain transaction activity requirements are met.

Avoiding fees at interest-bearing checking accounts, however, requires a minimum balance at 75% of accounts surveyed. That balance, however, has nearly tripled in the past 15 years. In 2007, the average minimum balance for an interest-bearing checking account was $3,316. In 2002, it was $1,866.