To judge overdraft fees holistically for each firm in the Bank Monitor coverage group, Corporate Insight’s November Report imagined a nightmare scenario—in which an account holder incurred the daily maximum number of overdraft fees, as well as an overdraft protection transfer fee and the minimum extended overdraft fee—then calculated the total fees each firm would charge. These totals tended to be high; 15 firms charge $100 or more and, on average, the coverage group charges $161.83. Overdraft and non-sufficient funds (NSF) fees average around $33 for the coverage group—though many charge more than that—while most (72%) charge account holders for at least four overdraft items in a given day.
Firms that performed well in our scenario avoid charging additional fees around overdraft situations. While they offer overdraft protection—the automatic transfer of money from a linked account to cover overdrafts—many firms in the coverage group (67%) charge a fee for each of these transfers. Extended overdraft fees, assessed after account holders fail to correct a negative balance within a firm-defined period, are less common (44%). These fees tend to apply after five business days (although the range spans from four business days to seven calendar days), with an average minimum fee of $34.56.
While lower standard fees and daily maximums certainly helped, the six best-performing firms (33%) in our scenario are also the only firms that do not charge additional fees for protection transfers or negative balances. By limiting account holders to one overdraft or NSF fee per day and charging no additional fees, Ally and Discover had the lowest totals—$25 and $30, respectively—in our holistic evaluation. Only three firms—Bank of America, Citibank and Wells Fargo—beat the average in our scenario while still charging a protection transfer fee. None of the eight firms that charge an extended overdraft fee beat the average; for PNC and U.S. Bank, this fee made the difference. Meanwhile, Citizens Bank charges the most ($287) in our scenario, with the highest daily maximum number of fees (seven) and other additional fees.