CFPB Reports Overall Decrease in Overdraft/NSF Revenue

Last week, we reported on the Consumer Financial Protection Bureau’s (CFPB or Bureau) proposed amendments to Regulation Z to target credit card fees. Despite the CFPB’s position that these credit card fees are a prevailing issue in the industry, they did report an overall decrease in overdraft/nonsufficient funds (NSF) revenue from those reported pre-pandemic. 

Since 2021, several banks have announced policy changes to their overdraft programs “that have been expected to reduce overdraft/[NSF] fee revenue.” The first three (3) quarters of 2022 combined saw a total overdraft/NFS fee revenue of “$5.8 billion, compared to $8.6 billion across the first three [(3)] quarters of 2019.”  

The CFPB’s most recent analysis found that bank overdraft/NSF fee revenue had a 43% decrease in the third quarter (Q3) of 2022 when compared to 2019 Q3, which was before the COVID-19 pandemic onset. This downward trend began in the first quarter of 2021 and has continued to progress.  

While there are significant differences across banks, the CFPB claims the overall decrease in overdraft/NSF revenue likely reflects the changes in overdraft/NSF programs. “[O]verdraft/NSF revenue often varies based on seasonal patterns,” but the continuous drop reported throughout the first three (3) quarters of 2022 suggests that the banks’ new overdraft/NSF policies are impacting their revenues. In fact, the decrease between 2022 Q3 and 2019 Q3 amounted to an approximate $5.1 billion loss in collected fees per year.  

Despite these reported losses, the CFPB stated that the report indicates banks are not replacing the decreasing revenue from overdraft/NSF with other listed fees as there has been no reported increase in other fees assessed on consumers.  

The CFPB affirmed that it would continue to observe overdraft/NSF fees and that they are considering “rulemaking activities related to these fees.”