Pedestrians pass a JPMorgan Chase bank branch in New York.<\/p>\n
Michael Nagle | Bloomberg | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The three biggest American retail banks collected 25% less overdraft revenue last year as the companies, under pressure<\/a> from regulators to cap the fees, created new ways for customers to avoid the penalties.<\/p>\n JPMorgan Chase<\/a><\/span><\/span><\/span>, Wells Fargo<\/a><\/span><\/span><\/span> and Bank of America<\/a><\/span><\/span><\/span> reported a combined $2.2 billion in overdraft fees in 2023, roughly $700 million less than the previous year, according to regulatory filings<\/a>.<\/p>\n Overdraft fees<\/a> are triggered when a customer attempts to spend more than the balance in their checking accounts. At around $35 per transaction at many banks, the fees have been a lucrative line item for the industry, generating $280 billion in revenue since 2000, according to the Consumer Financial Protection Bureau.<\/p>\n The industry is girding<\/a> itself for a battle over overdraft after the CFPB last month unveiled<\/a> a proposal to limit charges to as little as $3 per transaction. Banks say overdraft services are a lifeline<\/a> that helps users avoid worse options like payday loans, while critics including President Biden say the fees exploit struggling Americans.<\/p>\n<\/div>\n The practice has brought unwelcome attention to big banks. During a 2021 hearing, Sen. Elizabeth Warren<\/a> needled<\/a> JPMorgan CEO Jamie Dimon<\/a> on the fees. Dimon at the time refused her call to refund $1.5 billion to customers.<\/p>\n But even before recent<\/a> efforts by regulators, banks’ haul from overdraft has been on the decline<\/a>. Pandemic stimulus money helped Americans trigger fewer of the fees starting in 2020, and then firms including Capital One<\/a>, Citigroup<\/a> and Ally<\/a> voluntarily ended the practice.<\/p>\n Those who kept the fees, including JPMorgan, limited the types of transactions that trigger penalties, got rid of fees for bounced checks and introduced<\/a> one-day grace periods<\/a> and $50 cushions to reduce their frequency.<\/p>\n Bank of America cut<\/a> the fees to $10 from $35 in 2022.<\/p>\n “Whether folks eliminated some fees or dramatically reduced the cost of others, there’s been very significant shifts here,” said Jennifer Tescher<\/a>,<\/a> CEO of nonprofit group Financial Health Network. “Banks aren’t just getting rid of overdraft, they’re trying to find more customer-friendly ways of meeting their liquidity needs while making sure they aren’t overextended.”<\/p>\n<\/div>\n<\/a>Steady decline<\/h2>\n