The CFPB has issued a data spotlight that shows bank overdraft/non-sufficient funds (NSF) fee revenues have declined significantly from their pre-pandemic levels.
The report states:
Overdraft/NSF revenue for the fourth quarter of 2022 alone was approximately $1.5 billion lower than in the fourth quarter of 2019 – a decrease of 48% compared to before the pandemic, suggesting an annual reduction of over $5.5 billion going forward. This decrease suggests average annual savings of more than $150 per household that incurs overdraft or NSF fees; many households that have typically paid a high number of overdraft or NSF fees annually have saved much more.
The report also states:
Evidence continues to suggest that financial intuitions are not increasing other checking account fees to compensate for reduced overdraft/NSF revenue. Across all reporting banks, combined account maintenance and ATM fees remained flat from 2019 to 2022.
In a press release about the CFPB report, the Consumer Bankers Association (CBA) sets forth important findings of the Brookings Institute based on recent research and of the global intelligence firm Curinos in an August 2022 study that supports the CFPB’s analysis. CBA observes that banks “are working to lower costs while simultaneously protecting access to overdraft because there is a clear need.” The press release also cites recent comments from leading regulators, legislators, and academics from across the political spectrum that have recognized the positive impact of these changes. Such comments include CFPB Director Chopra’s statement at CBA LIVE in March 2023 that “[t]here has been very, very important shifts. We are very gratified that this industry seems like it’s competing again on [overdraft]. […] This has been a healthy move.”
Despite these positive trends, the CFPB states in the new report, as it did in its Fall 2022 rulemaking agenda, that it is “considering rulemaking activities related to [overdraft/NSF] fees.” It also states in the new report that it “will also continue to follow other listed fees to discern to what extent these fees might create barriers to account access.” Such “listed fees” are periodic maintenance fees and ATM fees.
The new data clearly calls into question the need for CFPB rulemaking on overdraft/NSF fees. We share the CBA’s view that “[a]s the CFPB considers future action, policymakers should recognize these reforms from the nation’s largest banks have occurred without regulatory or legislative intervention and collectively represent a transformational moment in time for the industry.”