Examining Overdraft Fees and Their Effects on Working Families

Chairman Brown, Ranking Member Toomey, and distinguished Members of the Committee, the American Bankers Association1 (ABA) appreciates the opportunity to submit a statement for the record for today’s hearing examining overdraft protection services.

ABA has long advocated for regulatory policies that ensure consumers have a wide range of options within the regulated banking industry to meet emergency expenses and to help customers address misalignments in deposits and payments. Consumers should be able to choose from revolving credit, installment loans, single payment loans, and overdraft protection services.

Overdraft protection services are an important source of liquidity for many Americans. With access to overdraft protection, bank customers can have confidence that they can pay their rent or utility bill, thereby avoiding late fees, a utility shut-off, or even eviction. For customers living paycheck to paycheck, access to overdraft provides significant value. The average transaction amount paid into overdraft was $198 in 2019, according to the research firm Curinos. Unsurprisingly, 9 in 10 consumers (89%) find their bank’s overdraft protection valuable,according to a February 2022 national survey by Morning Consult.

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