News Release: New Report Highlights How Overdraft Fees Hit Low-Income Households Hardest


Dec. 18, 2023

William Pierre-Louis, Jr.

New Report Highlights How Overdraft Fees Hit Low-Income Households Hardest 

Washington, D.C. – The Consumer Financial Protection Bureau’s (CFPB) latest report reveals that consumers continue to face excessive and punitive overdraft fees despite recent changes implemented by banks and credit unions, underscoring the need for strong regulatory action. 

Overdraft and nonsufficient fund fees can be nearly impossible for families living paycheck to paycheck to avoid,” said Kimberly Fountain, consumer financial justice field manager at Americans for Financial Reform. “An end to these harmful fees, which bear no relationship to the cost incurred by financial institutions to cover overdrafts, is long overdue.” 

The CFPB’s report explores consumers’ experiences with banking practices that result in hefty fees applied to bank balances. A key finding from the report shows that households frequently incurring overdraft and non-sufficient funds (NSF) fees are more likely to struggle to meet their financial obligations. Among households that frequently incurred overdraft/NSF fees, 81 percent reported difficulty paying a bill at least once in the past year. Additionally, Black consumers are 84 percent more likely and Hispanic consumers are 89 percent more likely to reside in a household that is frequently hit with overdraft/NSF fees.

The report, citing a CFPB survey, concludes that the overwhelming majority of consumers did not expect to overdraw their account, and often had access to cheaper forms of credit. This finding contradicts the bank lobby’s frequent argument that consumers consciously use overdrafts as a tool for managing their spending.