Fees associated with the overdraft protection available for some personal checking accounts have drawn a lot of attention lately.

Consumer advocates say banks have recently sought ways to increase fee revenue to supplant declines in other revenue streams.

These fees,and in particular, overdraft fees, have become a significant moneymaker for some banks.

In 2015, banks required to file quarterly financial statements with the Consumer Finance Protection Bureau reported a total of $11.6 billion in overdraft and NSF fee revenue, representing 8 percent of the banks’ total net income.

The Bureau is actively studying overdraft practices and may soon implement new rules to give consumers greater protections. Private attorneys are also keeping an eye on the overdraft fee practices at several U.S. banks as part of an ongoing class action lawsuit investigation.

A Closer Look at People’s United Financial

One of the institutions within the investigation is People’s United Financial. On its website, People’s United Financial Inc. describes itself as “a diversified financial services company with over $39 billion in assets.”

It’s the parent company of People’s United Bank, a regional bank that offers commercial banking, retail banking and wealth management services throughout six northeastern states.

Through its banking subsidiary, People’s United Financial offers checking account customers overdraft protection by default.

The bank says that under its standard overdraft practices, put in place with every new checking account, it will at its discretion pay items presented against the customer’s account that would otherwise create an overdraft.

These standard overdraft practices apply to checks and related transactions, and to electronic transactions like automatic bill payments and ACH withdrawals. People’s United requires the customer’s opt-in to apply the same overdraft protection to ATM and one-time debit card transactions.

People’s United Financial’s bank subsidiary says it charges a $37 fee for each overdraft item presented for payment.

The bank says it will limit application of this fee to five transactions per day, and it will not charge the fee if, after all items for the day have posted to the account, the account is overdrawn by less than $5.

As alternatives to its standard overdraft practices, People’s United offers to pay would-be overdrafts from a personal credit line or from a linked savings account. The personal credit line option is subject to approval, and funds advanced via that method incur an interest charge.

The linked savings account option, called Overdraft Protection Sweep, covers would-be overdrafts for a fee of $10 per transfer.

CFPB Offers Tips to Avoid Overdraft Fees

The Consumer Financial Protection Bureau recommends a few steps that customers can take to help People’s United Financial customers and those at other institutions avoid overdraft fees.

One simple aid is to sign up for low balance alerts that tell the customer when their account balance drops below a certain level. The Bureau also recommends that banking customers not opt-in to overdraft protection for ATM and debit card transactions.

Financial institutions can’t charge an overdraft protection fee if the customer does not opt in.

The Bureau does recommend that customers look into the linked savings account option that some banks offer. Fees for transfers made under this option tend to be lower than those for ordinary overdrafts or NSF items, the Bureau says.

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