Released: December 03, 2008

FDIC criticizes bank overdraft fees

Source: Kathy Chu, USA Today

Overdraft fees are boosting banks’ profits at the expense of consumers, especially young and low-income people, finds a new Federal Deposit Insurance Corp. study.

The 18-month survey found that most banks automatically enroll consumers in overdraft programs — some don’t allow them to opt out — and then cover overdrawn transactions for a per-item fee of up to $38.

The survey excludes many of the largest banks in the nation, because it covers only FDIC-supervised banks. Still, it’s the largest study of overdraft programs by a bank regulator and helps “fill an important universe of information that has not been available to policymakers,” says Andrew Gray, agency spokesman.

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