Debit Card Overdraft Costs $2 for Every Dollar Borrowed; Banks Get $53B in Fees
The average fee for overdrawing your account, by check or debit, reached a record high of $27.40 last year, up 11% from five years before, according to Bankrate.com, reports USA Today..
In 2006, financial institutions earned $53 billion in overdraft fees, a 58% increase from 2001, estimates consultant Moebs Services.
Consumers are not happy. In a survey conducted by the Center for Responsible Lending, 61% of consumers who had a preference said they would want to have their bank deny a debit card transaction — rather than approve it and charge a fee — if it will overdraw the account.
Making an in-store debit card purchase is by far the most expensive way to overdraft, costing $2.17 for every dollar borrowed. By comparison, check-triggered overdraft loans cost $0.86 per dollar borrowed, according to the report.