QoD: How much did consumers pay in overdraft fees in 2017 (in billions)?
Answer: $34.3 billion
Here's how the average fee has grown over the past decade:
- In your own words, what does it mean to overdraw your account?
- Why do you think that banks collect so much in overdraft fees from consumers?
- Young people are particularly susceptible to these fees. What steps can you take to avoid these pesky fees?
Behind the numbers (Wealth 101 Infographic):
Banks charged U.S. consumers $34.3 billion in overdraft fees in 2017 – and now, the average overdraft fee is $33.23, a high cost to pay for allowing a potentially small transaction to go through.
Some experts say that overdraft fees can set some account holders into a “downwards spiral”, where negative account values lead to even more overdraft fees.
For this reason, financial institutions have been required by law since 2010 to give consumers an explanation on overdraft policies, including the fees and alternatives.
Here's a project that shows students the "ins and outs" of how overdraft works by analyzing the policies of several large banks: Overdraft Fee Analysis.
Let your students practice managing a bank account with this interactive, Navigate Your Online Bank Account (Short Version)
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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