According to a CNNMoney analysis verified by S&P Global Market Intelligence, America’s three largest banks – Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM) – racked up ATM and overdraft protection fees of more than $6.4 billion in 2017.
In 2016, the banks collected almost $300 million more in overdraft protections fees than they did in 2015, and there are no signs of scaling back, despite public outcry and many consumers calling it an unfair system, the analysis reports.
JPMorgan reported ATM fee revenue of 22% last year. Per American, overdraft protection fees average to over $25 in annual fees.
According to the analysis, the 22% jump in revenue from ATM and overdraft protection fees stems from a rise of 50 cents JPMorgan added and charged customers who would use a non-JPMorgan Chase ATM machine. The fee was added in late 2015.
A senior policy counsel at an advocacy group, Consumer Union, says, “These fees have a disproportionate impact on low and moderate income families living paycheck to paycheck.” The Consumer Financial Protection Bureau (CFPB) has attempted to warn people to watch out for bank and rising ATM and overdraft protection fees.
During the presidential election, Senator Bernie Sanders complained of the rising issue with ATM fees and vowed to decrease ATM fees to a $2 maximum. Currently, the average fee for Americans in using an “out-of-network” ATM is $4.57.
According to Senator Bernie Sanders, “It is unacceptable that Americans are paying a $4 or $5 fee each time they go to the ATM.” Even more so, banks are said to rack up much more money charging customers “maintenance” and overdraft fees than ATM fees, the analysis says.
A maintenance fee is one that is charged to a customers’ account just to keep it open, and some banks even charge if a customer’s account balance drops below a certain limit, such as $5,000. With overdraft fees, a charge is made against a customer’s account if their balance drops below $0. It is almost essentially a bank loan and many banks charge a hefty fee of around $35 every time an overdraft charge is made by a customer.
In total revenue and profits being racked up from overdraft protection fees, Wells Fargo made $1.8 billion, JP Morgan made approximately $2 billion, and Bank of American made $1.7 billion.
The senior policy counsel at Consumers Union adds that “[s]o-called ‘overdraft protection’ programs are really just a way for banks to bilk their most vulnerable customers with costly fees.” Many complain that overdraft fees are an unfair system.
However, according to a 2014 Pew Study, more than half of consumers surveyed did not remember ever consenting to overdraft fee service. An additional CFPB report maintains that 8% of customers, mostly those that are young and poor, pay 75% of overdraft protection fees, and overdraft more than 10 times a year.
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