Jun 25, 2013 Sean Albert
American consumers have been using traditional bank checking accounts for years. However, a recently released white paper from the Consumer Financial Protection Bureau (CFPB) shows that these accounts are becoming extremely costly for United States citizens.
Overall, the CFPB found that 27 percent of checking accounts in 2011 had at least one overdraft fee assessed. The average value of fees paid out by these accounts was $225.
Of those consumers that overdrafted, 27.8 percent were listed as heavy overdrafters, with more than 10 monetary penalties counted against them in 2011. Although these type of penalties have been commonplace since the inception of checking accounts, officials with the CFPB are worried about the amounts banks are charging.
"Consumers need to be able to anticipate and avoid unnecessary fees on their checking accounts. But we are concerned that overdraft programs at some banks may be increasing consumer costs," said Richard Cordray, the director of the CFPB.
According to the source, although the average number of monthly electronic payments grew by 53 percent between 2000 and 2011, the number of check transactions has declined. In 2000, the average household made 22.2 check payments per month compared to just 10.6 in 2011. With overdraft fees becoming a concern for consumers, other electronic payment products have become more popular, including ACH cards. Just 1.6 ACH payments were made by U.S. homes in 2000 every month, while 6.6 transactions were made per month during 2011.
Data from The Electronic Payments Association (NACHA) released in May showed that ACH transactions become the No. 1 choice for U.S. consumers to make bill payments. Direct ACH payments account for nearly 50 percent of bill payments, according to the source. Also, 48 percent of bill providers prefer being paid via ACH compared to 21 percent who prefer card transactions.