WASHINGTON–Total overdraft fees charged by national banks have declined by more than 40% to $4 billion from $6.5 billion in 2021 to $4 billion in 2023, according to the Comptroller of the Currency.
In remarks to a conference of the National Community Reinvestment Coalition (NCRC) Michael Hsu said data gathered from the largest banks indicate the declines continue in overdraft fees quarter over quarter.
Some Outperform, Others Lag
“Among large banks, several have outperformed their peers in terms of reducing fees and adopting pro-consumer features, such as grace periods, while others have reduced overdraft fees only modestly,” Hsu told the meeting in remarks marking the one-year anniversary of the OCC’s release of guidance on overdraft fees, which were released April 1, 2023.
“Importantly, all OCC-supervised large banks have stopped assessing authorize positive, settle negative fees or insufficient funds fees and most have discontinued collecting sustained overdraft fees,” Hsu told the NCRC.
As CUToday.info has reported, the authorize-positive, settle negative fees have led to a number of lawsuits against credit unions.
As for the OCC’s regulation of midsize and community banks, Hsu said the regulator has not made and is not in the process of making various pro-consumer changes to their overdraft protection programs.
“For instance, most have eliminated representment fees or started offering de minimis grace amounts or grace periods,” Hsu said. “This includes those community banks that derive an outsized amount of revenue from overdrafts.”
Role of Core Processing
That progress, however, said Hsu, has been “more challenging due to the critical role played by the core processors. I have had the opportunity to share community bankers’ concerns on this issue with representatives of the core processors and encouraged them to continue to enhance their systems to facilitate transparency and pro-consumer practices,” Hsu said. “We understand the largest core processors are taking steps that will allow banks to identify and address representment practices. As those plans develop, we will continue to encourage banks and the core processors to take steps to protect and empower consumers.”
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