Bretton Woods, Inc. :: Banks and Credit Unions Collect $37 Billion in Fees Annually on Overdrawn Checking Accounts

Average U.S. household faces more than 12 overdraft transactions a year

ST. SIMON'S ISLAND, Ga., Jan. 12 /PRNewswire-USNewswire/ -- New research by Bretton Woods Inc., a bank strategy consulting firm, details, by state, the amount in overdraft protection and non-sufficient fund fees collected by banks and credit unions in 2008. The research by bank strategist G. Michael Flores reveals the amount in fees paid by the average household with a checking account and discusses how banks and credit unions are more dependent on these fees for income.

"It's becoming very clear that banks are increasingly reliant on fees resulting from overdrawn checking accounts for income," said Mr. Flores. "Nationally, the average household now has more than 12 overdraft transactions per year and pays $368 per year in fees. We see no reason for this trend to change. Bounced check fees and overdraft protection will have a larger and larger financial impact on households."

Read the full report at http://bretton-woods.com/452/18901.html

Key Findings:

Fee Income

Bank and credit union income from non-sufficient funds (NSF) and overdraft program (ODP) fees exceed $37 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 $368.
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.

State-by-State Analysis

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.

                                  Adjusted Calculations
                    Total       % of     Adjusted   Adjusted NSF  NSF per
                   Deposits     Total   NSF Income  $$/Banked HH  HH/Median
                                          (000)        (000)      HH Income
    State Name
    Alabama        76,561,000    1.1%     409,142      256.64        0.6%
    Alaska         13,660,000    0.2%      72,999      335.72        0.5%
    Arizona        78,663,000    1.1%     420,375      198.75        0.4%
    Arkansas       47,148,000    0.7%     251,959      261.40        0.6%
    California    762,774,000   11.0%   4,076,267      366.05        0.6%
    Colorado       83,140,000    1.2%     444,300      263.70        0.4%
    Connecticut    83,201,000    1.2%     444,626      362.21        0.5%
    Delaware      176,862,000    2.5%     945,151    3,139.04        5.1%
    District
    of Columbia    23,438,000    0.3%     125,253      576.54        1.1%
    Florida       380,282,000    5.5%   2,032,228      307.75        0.6%
    Georgia       184,318,000    2.6%     984,996      315.91        0.6%
    Hawaii         26,179,000    0.4%     139,901      343.63        0.6%
    Idaho          17,228,000    0.2%      92,066      184.24        0.4%
    Illinois      344,624,000    5.0%   1,841,672      431.11        0.7%
    Indiana        90,638,000    1.3%     484,370      225.91        0.4%
    Iowa           60,108,000    0.9%     321,217      303.15        0.6%
    Kansas         57,869,000    0.8%     309,252      325.73        0.6%
    Kentucky       64,391,000    0.9%     344,106      230.44        0.5%
    Louisiana      72,513,000    1.0%     387,510      274.07        0.7%
    Maine          19,529,000    0.3%     104,363      212.26        0.5%
    Maryland       96,614,000    1.4%     516,306      268.88        0.4%
    Massachusetts 185,324,000    2.7%     990,372      442.95        0.6%
    Michigan      157,224,000    2.3%     840,206      243.59        0.4%
    Minnesota     101,115,000    1.5%     540,359      291.57        0.5%
    Mississippi    45,454,000    0.7%     242,906      261.14        0.7%
    Missouri      110,725,000    1.6%     591,715      288.56        0.6%
    Montana        15,526,000    0.2%      82,971      241.46        0.6%
    Nebraska       38,849,000    0.6%     207,609      331.49        0.7%
    Nevada        199,793,000    2.9%   1,067,694    1,216.43        2.1%
    New Hampshire  22,988,000    0.3%     122,848      263.85        0.4%
    New Jersey    227,192,000    3.3%   1,214,115      426.41        0.6%
    New Mexico     22,304,000    0.3%     119,193      180.11        0.4%
    New York      759,022,000   10.9%   4,056,216      658.92        1.1%
    North
    Carolina      219,477,000    3.2%   1,172,886      376.10        0.7%
    North Dakota   15,307,000    0.2%      81,801      357.35        0.8%
    Ohio          227,825,000    3.3%   1,217,497      306.31        0.6%
    Oklahoma       62,990,000    0.9%     336,619      276.52        0.6%
    Oregon         49,162,000    0.7%     262,722      197.58        0.4%
    Pennsylvania  271,747,000    3.9%   1,452,217      329.57        0.6%
    Rhode Island   29,587,000    0.4%     158,113      430.96        0.8%
    South
    Carolina       66,549,000    1.0%     355,638      235.98        0.5%
    South Dakota   74,885,000    1.1%     400,186    1,486.10        3.2%
    Tennessee     104,774,000    1.5%     559,913      263.78        0.6%
    Texas         484,231,000    7.0%   2,587,732      356.03        0.7%
    Utah          229,330,000    3.3%   1,225,540    1,636.63        2.7%
    Vermont         9,949,000    0.1%      53,167      235.67        0.4%
    Virginia      200,372,000    2.9%   1,070,789      400.36        0.6%
    Washington    112,331,000    1.6%     600,297      264.40        0.4%
    West Virginia  26,889,000    0.4%     143,695      216.86        0.6%
    Wisconsin     114,838,000    1.7%     613,695      310.96        0.6%
    Wyoming        11,052,000    0.2%      59,062      311.61        0.6%
    TOTAL      $6,956,551,000  100.0% $37,175,830      368.51        0.8%

Note: There are anomalies in states such as Delaware, Nevada, South Dakota and Utah, due to how data is reported to FDIC and NCUA.(1)

NOTES:

(1) 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.

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