2008 Fee Analysis of Bank and Credit Union Non-Sufficient Funds and Overdraft Protection Programs

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Key Findings: 

Fee Income 

• Bank and credit union income from non-sufficient funds (NSF) and overdraft  program (ODP) fees exceed $34.7 billion.

• NSF/ODP fee income by state ranges from nearly $73 million in Alaska to $4.07 billion in California.  

NSF/ODP Cost per Household 

• The national annual NSF cost per household with checking accounts is approximately $239.46. 

• Active households (defined as the 20.2 million households with bank or credit union accounts who write the majority of NSF items) pay $1,472 in annual NSF fees.  

NSF/ODP Transactions

• The average United States household with a banking account incurs 12.7 NSF fees per year. 

•  Bank and credit union data used in Bretton Woods’ modeling determined 1.28 billion separate check and electronic NSF items.

• An estimated 20.2 million households with bank or credit union accounts write the majority of NSF items (1.02 billion) incurring $29.7 billion in NSF fees or approximately $1,472 in fees per active household.   

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State-by-State Analysis

Key Findings 

The national annual NSF/ODP cost per household with checking accounts is approximately $368.  The chart below details the estimated amount of NSF/ODP fees, in millions, collected by credit unions and banks in individual states.  Using California as an example, it is estimated that checking account holders paid more than $4.07 billion in NSF/ODP fees in 2008.  When you consider the number of households with checking accounts in California, it is estimated that, on average, Californians paid $366.05 per household in NSF/ODP fees in 2008.  In total, Californians spend 0.6 percent of their median household income on NSF/ODP fees.

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Note: There are anomalies in states such as Delaware, Nevada, South Dakota and Utah, due to how data is reported to FDIC and NCUA.*

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*Since FDIC and NCUA report data by the financial institution’s headquarters, service charge income is skewed for certain states that headquarter large bank holding companies (e.g. North Carolina and New York). To adjust for this skewing, Bretton Woods obtained the deposits by state (FDIC reports these numbers based on the branches residing in the state) and calculated the ratio of states’ deposits to total deposits in the United States.  This ratio was then applied to the service charge income to more reasonably determine the NSF/OD income and number of NSF items at the state level.