Overdraft fees charged by U.S. banks totaled a staggering $31.5 billion in 2012 according to an independent survey of a large size pool of banks and credit unions.
Bank overdraft fees were as high as $45 for each overdraft in some instances to consumers who are described by civic groups as the working poor and elderly. In many instances, an individual transaction from an insufficient check resulted in an overdraft fee applied multiple times as a systematic means to "maximize" revenue.
Consumer advocates critical of bank overdraft fees state that fees are excessive and don't necessarily reflect the dollar amount of the underlying transaction. Overdraft fees were applied regardless of the small dollar amount of any one particular transaction.
For example a nominal charge for a $0.12 photocopy results in an overdraft charge of approximately $29 which is the national overdraft fee average.
According to the survey conducted by Moebs Services, an economic research firm, 26% of all the consumer checking accounts in the U.S. are "frequent overdraft users" and over half of those frequent overdraft users also rely on alternative financial services such as pay day loans.
Pay Day loans have also been criticized for being predatory to low income consumers due to the high finance related APR charges. On average pay day loans cost consumers approximately $16 for every $100 borrowed.
The survey does suggest that low income and financially struggling consumers do have increasing options to "shop" for banks that charge more competitive or lower overdraft fees. Charges from overdraft transactions are expected to increase as banks capitalize on increasing overdraft usage.
Overdraft bank fees are up sharply from 2011 by $700 million. As the economy continues its sluggish recovery, struggling consumers seek alternate means to help meet regular living costs and overdraft usage seems to meet that need but at a high cost.