Banks Made $5.8B on Overdraft Fees -- Here's Who's Paying

In 2024, 11% of Americans paid an overdraft fee. Those charges, which cost $35 per incident on average, can quickly snowball into financial stress. Even as some banks eliminate overdraft fees, revenue from those and similar fees was nearly $6 billion in 2023.

If you've ever paid an overdraft fee, switching to a no-overdraft-fee bank account -- which some of the best checking accounts have as a feature -- or using a budgeting app with low-balance alerts can help avoid them in the future. Smart tools -- like some of the best banking apps -- and fee-free accounts are increasingly common and can stop the cycle before it starts.

How many Americans paid overdraft fees in 2024?

Eleven percent of Americans paid an overdraft fee in 2024, but that percentage jumps higher for lower-income Americans, younger Americans, and Black and Hispanic Americans, according to the Federal Reserve.

• Low-income earners drive overdraft fees: 16% of those that make less than $25,000 and 19% of those that make between $25,000 and $49,999 were hit with an overdraft fee compared to just 6% of those who make $100,000 or more.
• Seniors less likely to overdraft: 6% of those 60 and older paid an overdraft fee compared to 16% of 18 to 29 year olds, 14% of those aged 30 to 44, and 13% of Americans 45 to 59.
• Racial disparities in overdrafting: 6% of Asian adults and 9% of white adults paid an overdraft fee in 2024 compared to 21% of Black Americans and 16% of Hispanic Americans.
  
  

What's the average overdraft fee?

The average overdraft fee is around $35, according to the FDIC. This table shows overdraft fees charged by the top 20 banks as of April 2024.

Many of the largest banks have overdraft fees around $35. Bank of America stands out for its $10 overdraft fee, which it lowered from $35 in 2022.

How much do banks make on overdraft fees?

Overdraft and non-sufficient funds fees generate hundreds of millions of dollars for banks, and in the case of JPMorgan Chase, over 1.1 billion.

That said, overdraft and NSF fee revenue has been more than halved since 2019, when banks brought in almost $12 billion in revenue from those fees alone. In 2023, banks made $5.83 billion in overdraft and NSF fees, according to CFPB. Big banks in particular have lost billions in overdraft and NSF revenue between 2019 and 2023.

• Bank of America's overdraft and NSF fee revenue dropped $1.4 billion from 2019 to 2023 after it cut its overdraft penalty from $35 to $10 in 2022 and eliminated its NSF fee.
• JPMorgan Chase's overdraft and NSF revenue fell $957 million, from just over $2 billion to $1.1 billion from 2019 to 2023. While JPMorgan Chase still maintains a $34 overdraft fee, it has made other changes that have scaled back revenue, including limiting the types of transactions that trigger overdraft and NSF fees and providing grace periods for consumers to fix account balances.
• Wells Fargo's NSF and overdraft revenue fell $759 million over that same period, from $1.7 billion to $937 million. Wells Fargo has a $34 overdraft fee, but eliminated overdraft protection fees and some NSF fees in 2022.
  
  

How to avoid overdraft fees

Overdraft and NSF fees may be shrinking, but they're far from gone. Banks still collected $5.8 billion in overdraft fees in 2023 and millions of Americans -- especially those with low incomes -- are footing the bill.

To avoid pesky overdraft and NSF fees, consider switching to checking accounts or banks that don't charge overdraft fees, or have lower fees. Budgeting tools that track balances in real time and alert users of low balances are also useful.

With the right tools and account choices, consumers can keep more of their money and leave overdraft fees behind.