While banks took a big hit after the financial crisis, they seem to be getting back on their feet with the revenue they’re earning from overdraft fees.

A recent report found that the three largest banks in the United States, JP Morgan Chase, Bank of America and Wells Fargo, have together made more than $1.1 billion in overdraft fees in the first quarter of 2015.

If their earnings from overdraft fees continue, these three banks alone will be inching closer to nearly $5 billion over the course of a single year.

Customers are only supposed to be charged overdraft fees while taking out cash at the ATM or using a debit card to pay for purchases if they have opted in to such a service.

However, if a customer’s balance is negative due to a cashed check or automatic electronic payment, the bank or credit union can still attach a fee for insufficient funds.

Legally, banking and credit union customers can opt out of overdraft services for ATM withdrawals and debit card transactions. If this occurs, the transactions will be denied and consumers will not be charged an associated overdraft fee.

With some banks and credit unions, there is no limit to how many overdraft fees can be charged per day. Some will cap their number of fees at three to five per day as a courtesy, but a lot of companies choose to allow unlimited fees to be assessed.

This year, banks have had to disclose their overdraft fees for the first time. The typical bank overdraft fee is $35. For credit unions, the average has been reported to be lower than banks, usually around $28-30, but credit unions have had their fees creep up, possibly because they see an easy and successful way to earn revenue.

Of over 600 banks surveyed this year that were required to report overdraft fees, their total revenue from those fees for January, February and March of this year reached over $2.5 billion.

The average bank revenue for overdraft fees is just under eight percent. Some smaller banks obtain more than 40 pecent of their non-interest revenue from overdraft fees alone.

Smaller, more local credit unions like State Employees Credit Union of Maryland in Linthicum, MD; State Employees Federal Credit Union in Albany, NY; Wescom Central Credit Union in Pasadena, CA; San Antonio Federal Credit Union in San Antonio, TX; and Tower Federal Credit Union in Laurel, MD may decide to follow suit once they see how successful other banks and credit unions have become at increasing revenue from overdraft fees.

What is Overdraft Protection?

At any bank or credit union, the institution likely has an overdraft fee statement as part of their standard policies. Nearly all institutions have you sign the agreement that in the case of non-sufficient funds, they will pay your cashed check so it does not bounce or will send an automatic payment that you have set up to a designated payee.

For everyday debit card transactions or ATM withdrawals, you have to opt in to the service and pay the related overdraft fees. Sometimes there is no limit to how many times in a single day you can be hit with these overdraft charges.

A recent survey showed that over half of those who withdrew their checking accounts over the past year had no recollection to opting in to the optional overdraft service.

Currently the Consumer Financial Protection Bureau is examining overdraft fees to see what banks are charging to hopefully ultimately offer a remedy for the exorbitant fees many consumers are facing.

Class Actions Lawsuits for Credit Union Overdraft Fees

Currently, lawyers are investigating consumer allegations against credit unions for potential improper practices regarding overdraft fees. If you are a member of a credit union and have incurred overdraft charges, you may be entitled to legal compensation.

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