"The survey shows that most consumers are smart consumers, who manage their accounts well," said Nessa Feddis, ABA senior federal counsel and retail banking expert. Of the 20 percent who have paid an overdraft fee in the past 12 months, they provided the following responses when asked how many
- 31 percent said one;
- 16 percent said two;
- 18 percent said three;
- 10 percent said four;
- 6 percent said five;
- 12 percent said six to 10; and
- 5 percent said more than 10.
Most consumers (79 percent) said their bank covered the check or debit payment that caused the overdraft fee, while 19 percent said their bank did not, and 2 percent did not know. Of those who did pay an overdraft fee in the past 12 months, 88 percent said they were glad the payment was covered while 11 percent said they wished the bank had refused the payment.
Approximately 18.3 million checks "bounced" or were return unpaid in 2003, according to the Federal Reserve. This is 0.5 percent of the total check volume in the United States. The average value per returned check was $756. The number of bounced checks has declined at an annual rate of 7.7 percent since 2000, which may reflect better money management by check writers or greater use of overdraft protection programs.
"Consumers appreciate banks paying their overdrafts," Feddis said. "They avoid the inconvenience, embarrassment and potential costs of having a payment or transaction rejected." Feddis stressed the importance of consumers keeping track of their transactions and balances because only they are aware of the transactions they have authorized that may not have been processed yet.
"Those who find it challenging to keep track of transactions and their balance can avoid overdrafts and fees by signing up to have overdrafts linked to a line of credit, savings account, or credit card," Feddis said.
The ABA offers the following tips to help consumers reduce the chances of bounced checks or overdraft fees:
- Do not write a check if you don't have the funds;
- Reconcile your account by keeping track of all transactions.
- Be aware that not all transactions are processed in real time and may be presented to an account at different times;
- Do not rely on "float" - the time it takes for a check to clear; and
- Overdraft protection programs are there for an emergency and should be used accordingly.
