Overdraft fees increase for the 15th straight year
Overdraft fees are the 800-pound gorilla of the fee world. While it's easy to get wound up over ATM fees, you'd have to make more than seven ATM withdrawals at out-of-network ATMs to equal just one overdraft at this year's average of $32.20 -- up almost $1 over last year's average of $31.26.
Still, banks are making less on overdrafts than they used to because it has become easier for customers to avoid them, says Matthew Kelley, senior research analyst at Birmingham, Ala.-based Sterne Agee.
"The technologies and the real-time updates that consumers now have -- again, with some of these mobile technologies -- is resulting in a lot less overdraft income," Kelley says.
Regulators also have had an effect. "Free checking was basically (paid for by) 5 percent to 10 percent of the population, which overdrafted a lot over the course of the year, subsidizing a product for the other 80 (percent) to 90 percent," Kelley says. "Regulators don't like that model."
While regulatory efforts have helped upend free checking at many banks, they've also given debit card users an easy way to avoid overdrafts: Don't opt in to bank overdraft programs. Refusing to opt in won't protect you from overdrafts due to ATM withdrawals and bill-pay services, but it will protect you from quickly racking up overdraft fees with small debit card purchases.