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Banks Hit Poorest With $38B in Overdraft Fees
By Jason Farago
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Posted Aug 10, 09 6:26 AM CDT
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(Newser)
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American banks will pull in $38.5 billion in overdraft fees this year, a record sum that's largely coming from pockets of the poorest and most indebted consumers. According to the Financial Times, banks hiked fees on overdrafts and credit cards as the financial crisis took hold; this year's take will be double that reported in 2000. Some 90% of overdraft revenues come from just 10% of checking account holders, many of whom have low credit scores.
The highest overdraft fees are charged by big banks like Citigroup, Bank of America, and JPMorgan Chase. At BofA, an account holder overdrawn by just $6 could be hit with a penalty of $35. "Banks are returning to a fee-driven model and overdraft fees are the mother lode," says one researcher.