Commerce Bank is among the financial institutions that make money by offering customers expensive overdraft protection.

According to the bank’s website, Check Plus Overdraft Protection “is an Overdraft Cash Advance from your Commerce Bank Visa credit card to cover overdrafts on your Commerce Bank checking account.”

The bank will automatically cover the overdrawn checking account up to your available credit limit by transferring an Overdraft Cash Advance from your credit card to your checking account once a day in increments of $50.

The cost to use this Check Plus Overdraft Protection is the Cash Advance fee, which is five percent with a minimum of $10, plus interest that begins accruing on the day of the Cash Advance transaction.

Commerce Bank offers a second overdraft protection option called Overdraft Transfer, which allows the bank to transfer money from a linked account in the event of an overdraft. The bank will transfer the total amount of the checks and debits that have overdrawn your checking account and make one transfer that day, charging a $12 overdraft transfer fee.

Commerce Bank Among Those That See Fees as Revenue

According to Pew Charitable Trusts, excessive overdraft fees have become the norm as banks more than doubled their revenue from fees and service charges between 1984 and 2015.

During that same time period, interest income has dropped.

Financial institutions such as Commerce Bank actually began to view fees as a way to diversify their sources of revenue.

“Income from fees for services has grown considerably over time,” states Pew’s website. “In 1984, fee revenue was small compared with income earned from interest. By 2015, this gap had narrowed substantially.”

Overdraft fees gained in popularity because of increased competition from deregulation and technological advances. These factors encouraged banks to find new revenue sources to maintain their profit margins.

Pew analyzed bank revenue information from the Federal Deposit Insurance Corp (FDIC) and took a close look at fee schedules and disclosure statements of 44 of the 50 largest banks in the United States.

Pew found that U.S. banks that held assets of more than $1 billion reported more than $11 billion in overdraft fee and non-sufficient funds revenue, amounting to nearly two-thirds of all consumer deposit account fee revenue.

Interestingly, Pew says “debit cards carry the lowest median value of all transactions that lead to overdrafts ($24, compared with nearly $100 for ACH, ATM and check transactions), and Pew’s analysis shows that debit transactions are the preferred tool of the most financially vulnerable bank customers.”

Overdraft fees are fixed, meaning the excessive overdraft fee will remain the same whether the account is overdrawn by $10 or $200.

Only 18 percent of account holders pay 91 percent of these excessive overdraft fees, and most of these customers earn less than $50,000 per year. Twenty-five percent of them pay a week’s worth of income in overdraft fees to financial institutions annually.

If you believe that Commerce Bank or any financial institution has charged you excessive overdraft fees, you could be eligible for legal compensation.

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