This post, written by Anthony Fontana, is from out partner site QuickenLoans.com.
Nobody likes wasting money, do they? Actually, according to a news report from Moebs Services, banks, credit unions and thrift institutions made $32 billion on overdraft fees in 2012. That’s right, $32, 000, 000, 000! That’s a lot of zeros.
The 2012 numbers represent an increase of $400 million, or 1.3 percent from 2011. If you think last year’s number is staggering, it still falls short of the record $37 billion in fees set in 2009. However, at its current rate, Moebs predicts a new record-high will be set at the end of 2016.
So, if you break down the population, how much did the average American pay? Well, considering there are approximately 330 million Americans, the average American paid about $100 in overdraft fees in 2012. If you break down the population by age, keep in mind that roughly 100 million Americans are outside the legal working age and are unlikely to contribute to the statistic. This means that the average working-age population paid close to $400 a year in overdraft fees.
Perhaps what’s even more unsettling is the rise in overdraft spending isn’t due to an increase in the price of the fee. Instead, it’s resulted from a greater number of overdrafts. Of the approximately 38 million people who have a consumer checking account, the Moebs study found that the median overdraft is about $40.
Apparently people really do like wasting money. If you fall into the category of someone who has been charged an overdraft fee, there are ways to ensure it doesn’t happen again. You can start by checking your account statement on a regular basis. In today’s world of smartphones, this task can be done in a matter of seconds without a trip to the bank or an ATM.
There are many ways to overdraft your account. The most common way is to withdraw more money from your account than you have. You can opt in for overdraft protection, which will allow you to withdraw the money and then pay a fee later on. If you decide against opting in for overdraft protection, your transaction will be denied.
While overdraft protection can be useful in some cases, a recent study by the Pew Charitable Trusts found that 54 percent of the customers who had overdrawn their accounts did not realize they had signed up for a service that cost money. Do you fall into this category?
Be sure to check with your bank about overdraft penalties and if you are signed up for overdraft protection. Do you think overdraft protection is worth paying the hefty fee? Let us know in the comments below!
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