By Maya Jackson Randall Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Bank overdraft fees are high for consumers but are a big revenue source for banks, according to a report Tuesday by U.S. regulators.
The Federal Deposit Insurance Corp. found that the number of banks providing overdraft protection fees "has grown rapidly over the past several years." And most of the banks it surveyed said they charge fees ranging between $10 and $38 per overdraft.
While the FDIC calculated the median overdraft fee at $27, the study proves that the total penalty for consumers can quickly rise beyond that. Assuming there is a $27 overdraft fee in place, for instance, a customer taking two weeks to pay an overdraft of $20 would incur an annual percentage rate of about 3,520%, the FDIC found.
On top of that, many of the banks the agency surveyed charge customers additional fees when accounts remain in negative balance status.
The FDIC launched its study of bank overdraft programs in 2006.
While overdraft programs are growing rapidly, the agency said that at the time it initiated the study, there was little data available to evaluate them. The FDIC surveyed more than 400 FDIC-supervised banks for the report.
The study comes amid growing concerns among consumer as well as lawmakers that bank fees are rising significantly, even as many consumers are struggling under the weight of the worst financial crisis in decades. In fact, a recent study by Bankrate.com found that nonsufficient funds fees, which are charged when customers' accounts go negative, are at a record high.
Stanford Group Co. analyst Jaret Seiberg, in a bulletin Tuesday, said the FDIC's new report is likely to "provide ammunition" to Democrats on Capitol Hill seeking to advance legislation that would restrict bank overdraft practices, which could be a significant blow to the banking industry.
The FDIC said in its report that overdraft fees are important sources of income for banks.
The agency estimates that banks in the study population earned $1.97 billion in nonsufficient funds-related fees in 2006. That's 74% of the banks' total $2.66 billion in service charges on deposit accounts.
The report also found that total nonsufficient funds-related fees accounted for roughly 6% of the total net operating revenue earned by banks. In fact, the report indicates that banks have seen their nonsufficient funds-related fee income steadily rise over the past five years.
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255, maya.jackson-randall@dowjones.com
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(END) Dow Jones Newswires
December 02, 2008 13:46 ET (18:46 GMT)

Publié le 02 Décembre 2008 Copyright © 2008 Dowjones