Overdraft fees inching up at big banks

Overdraft fees are creeping up once again after two years of stability, according to a survey from the Consumer Federation of America.

While $35 remains the going rate, two banks -- Fifth Third Bank and U.S. Bank -- are tweaking their tiered overdraft charge system, raising some fees.

Starting later this month, Fifth Third will charge $37 on the second overdraft of the year and all subsequent ones, after charging $25 for the first. The bank currently charges $33 on the second, third, and fourth overdrafts of the year. Customers will no longer be charged an $8 fee for each day an account is overdrawn.

Another change this year is the variation in ways banks process debit transactions, which can lead to more overdraft fees.

Two years ago, most banks processed transactions from largest to smallest. Now a number process time-stamped transactions in the order received, then processing checks and the rest from largest to smallest. BB&T posts in chronological order and then from smallest to largest.

Overdraft rules changed after the Dodd-Frank financial reform law in 2010, which requires banks to have customers "opt-in" to overdraft protection.

Soon after, Bank of America stopped charging overdraft fees for most purchases, instead declining the transaction.

The Consumer Federation states that it wants banks to take a similar course, by simply denying transactions that would put customers in the red.

“Banks should not be in the business of charging steep fees for small loans triggered by debit card sales and ATM transactions that can be denied at no cost to consumers,” director of financial services Jean Ann Fox said in a statement.


“The extreme fee in relation to very small loans that must be repaid in just days to avoid more fees means that bank payday lending is particularly burdensome to consumers who are struggling to make ends meet."