Overdrafts in Overdrive
WHY YOU SHOULD CARE
Because those $27 inconvenience fees add up to something much bigger.
By Sanjena Sathian
Those awkward letters you get, the ones that point out you’ve overdrawn your checking account or exceeded your credit limit? The ones that zing you like angry fire ants? Whether you think they’re a minor inconvenience or something more significant, the fees add up.
That’s how much banks make in overdraft fees a year. In the year 2012, to be specific. While that’s a little less than the $37 billion reeled in by banks in 2009, it’s a far cry from the $17.5 billion banks pulled in two years before, in 2007.
On average, individuals pay about $225 a year in those added-up fees — which range from $10 to $38 (the median settles around $27).
In other words: just enough that you might not really notice.
Explanations? Plenty have said the Dodd-Frank Act.
But then, of course, there’s just our own financial illiteracy (or, more likely, our carelessness) to blame. And then there’s the harsh reality that once your account has a negative balance, you’re likely to accumulate further charges.
Which is really the most beautiful way ever of adding $27 of insult to $32 billion of injury.
You can count on it.