Community Banks Offer Better Deal on Overdrafts Than Small CUs: Moebs
New survey also finds large banks and institutions in the Eastern U.S. charge the highest overdraft fees.
A new Moebs $ervices survey demonstrated recent changes in the landscape of overdraft fees in the U.S., including average fee amounts by financial institution type and size, and the key role location plays in average fee amounts.
According to the survey of 3,126 banks, credit unions and savings banks conducted by the Lake Forest, Ill.-based financial institution research firm in November 2020, community banks with less than $100 million in assets charged an average overdraft fee of $26.26 – $2.14 or 8.1% lower than the $28.40 charged by credit unions with less than $100 million in assets. The survey included all depositories with more than $500 million in assets and a statistical example of depositories with less than $500 million in assets.
The results were more consumer-friendly for large credit unions, however. The largest credit unions surveyed, those with over $10 billion in assets, maintained a low average overdraft price of $26.18 – $8.15 or 31% lower than the average price of $34.33 set by banks in the same asset category.
Altogether, banks and credit unions in the $10 billion-plus asset category charged an average overdraft fee of $33.19. That’s the highest ever recorded in Moebs studies going back to 1986 and Federal Reserve studies that began in the late 1950s, according to Moebs $ervices CEO and Chief Economist Michael Moebs. “This is a huge contrast in many decades for the overdraft business,” he said.
The survey also revealed the growing role of regions and cities in average overdraft fees. The most expensive region to bank in, overdraft fee-wise, is the Eastern U.S. with an average fee of $31.29, while the least expensive is the Western U.S. with an average fee of $29.18. At the state level, depositories in Kansas have set the lowest average overdraft price of $28.55, while Maryland and Florida tied for the highest of $33.13. San Diego received the honor of the major city with depositories charging the lowest average fee, $27.42. Miami’s average fee was the highest of all major cities at $34.90, according to the survey.