With 77% of consumers having not paid an overdraft fee in the previous 12 months, this source of bank revenue is fast losing traction. Thanks mostly to the recently passed CARD Act, only 21% of consumers paid one or more overdraft fees while 2% did not know whether they paid an overdraft fee and 90% of overdraft revenue comes from frequent users. Among the minority who did pay an overdraft fee in the previous 12 months, 69% were thankful the payment was covered while 29% wished the bank had refused the payment. These findings come on the heels of research concluding by the end of 2010, overdraft revenue is expected to total no more than $35.4 billion, down from $37.1 billion in 2009 and on par with 2008. The hit to OD revenue was felt in 4Q/09, during which $2 billion in revenue was lost when banks and credit unions started to implement their own floors and ceilings on overdrafts in response to Congressional complaints, which was then followed by another $2.3 billion in revenue lost in 1Q/10 thanks to the Opt-In regulation by the Federal Reserve, which cost banks and credit unions about $2 billion in operational costs and training to implement (CardFlash Library 08/17/2010).
OVERDRAFT REVENUE
2011: $38.0 B
2010: $35.4 B
2009: $37.1 B
2008: $35.4 B
2007: $34.1 B
2006: $31.5 B
2005: $29.7 B
SOURCE: MOEB$
