After a two-year hiatus, banks are again raising the fees they charge consumers who overdraft their account, according to a recent survey by the Consumer Federation of America, or CFA, a nonprofit consumer advocacy group in Washington, D.C.
The typical overdraft fee is still $35 per transaction, but two of the largest banks, U.S. Bank and Fifth Third Bank, have announced changes to their tiered fee structures that indicate rates are again on the rise, according to a CFA statement.
The CFA survey examined overdraft fees and practices at the 14 largest U.S. banks. Five banks -- Fifth Third, PNC, RBS Citizens, SunTrust and U.S. Bank -- charge tiered fees that vary depending on how many overdrafts the consumer incurs in a 12-month period. Almost two-thirds of the banks also "pile on" second or per-day fees if the consumer doesn't immediately repay the overdraft, the CFA said.
Most of the banks surveyed set a threshold, such as $5 total overdrawn in a day, before fees are charged. U.S. Bank sets the highest threshold at $10 while Bank of America, Citibank, HSBC and RBS Citizens charge fees when the account is overdrawn by less than $1, the survey found.
Jean Ann Fox, director of financial services at CFA, described big-bank overdraft fees for a single transaction as "very high, ranging from $33 to $37 at the largest banks."
Moreover, Fox added, consumers could be charged up to $370 in one day, based on one bank's highest fee and maximum daily fee limit.
Fox said banks shouldn't charge steep fees for small loans triggered by debit card sales and ATM transactions that could be denied at no cost to the consumer.
Three banks, Bank of America, Citibank and HSBC, don't allow their customers to incur overdraft fees when they use a debit card to make a purchase. Citibank and HSBC also prevent overdraft fees triggered at an ATM. The other 11 banks surveyed solicit consumers to opt in to pay overdraft fees on debit card point-of-sale and ATM transactions, the survey found.
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