A new survey shows that financial institutions’ overdraft fees are fairly consistent, and consistently pricy, among major U.S. cities.

The report by Bankrate.com surveyed 243 different financial institutions in the United States. Milwaukee topped the list of cities with the highest overdraft fees, with an average fee of $34.79.

No city in the top five had an average overdraft fee of less than $34.00. On the other end of the spectrum, the notoriously expensive city of San Francisco enjoys the lowest average overdraft fee of $30.35.

The national average for overdraft fees is now $33.07 — an increase of nine percent over the past five years.

Generally, the report shows increasing fees and other requirements are making it more expensive to have a checking account. In addition to increasing overdraft fees, financial institutions are also increasing ATM fees, and fewer are offering free no-interest checking accounts.

Overdraft fees are what a credit union or other financial institution charge to cover a debit when the account does not have adequate funds. Unlike with non-sufficient funds (or NSF) processing, overdraft protection is an alternative that gets the draft paid, either by extending credit to the account holder on the spot or by paying the draft from another account linked to the checking account.

On top of the increase in overdraft fees, some consumer advocates say the terms under which these fees are assessed can confuse the consumer and make the fees difficult to avoid. They say consumers who opt in to overdraft protection on average end up being charged more in fees and are more often subject to involuntary account closures.

The Consumer Financial Protection Bureau has been studying this problem and is planning to issue a new set of rules to address it. The rules are still in the development stages and may not be proposed until sometime in 2016.

The Bureau is considering preventing credit unions and other institutions from processing transactions in an order that makes overdraft fees more likely — for example, the credit union may process the largest transaction first, increasing the odds of overdrawing the account, then dinging the consumer for an overdraft fee for each subsequent transaction in the series.

The rules may also impose new requirements that credit unions clearly disclose the terms of their overdraft protection. Terms vary widely from institution to institution, and some consumers may not be clear on the fact that they have the option to opt out of overdraft protection.

It’s not just the big national banks that may have to amend their terms to conform to the new CFPB requirements; the same requirements will also be imposed on local and regional credit unions, such as:

• DFCU Financial Credit Union, Dearborn, Mich.
• Redstone Federal Credit Union, Huntsville, Ala.
• Onpoint Community Credit Union, Portland, Ore.
• Kinecta Federal Credit Union, Manhattan Beach, Calif.
• Visions Federal Credit Union, Endicott, N.Y.

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