CHICAGO–An estimate of how much Americans have been paying in overdraft and NSF fees has been revised upward following the release of data by NCUA.

According to the revised analysis, in 2024 consumers of “very large financial institutions,” defined as banks and credit unions with over $10 billion in assets, paid $5.2 billion in overdraft fees. Of that amount, credit union members paid an estimated $735 million, or 14%. 

The Financial Health Network is reporting that overall, Americans paid $11.8 billion dollars in overdraft and NSF fees in 2023 and $12.1 billion in 2024, compared with a previous 2023 estimate of $7.9 billion, the organization said, adding it was able to arrive at the figures after NCUA began collecting the OD/NSF figures for CUs over $1 billion in assets during 2024. 

“Previous models, which were developed without comprehensive and up-to-date credit union data, understated these costs – and the whole overdraft/NSF picture – by nearly $4 billion,” Financial Health Network reported. “Our updated analysis estimates that consumers paid $5.4 billion in overdraft and NSF fees at credit unions in 2024, up from $5.3 in 2023.”

A Look at the Pre-2024 Calculations

In its newly released analysis, the Financial Health Network noted that since 2015, federal banking agencies have required banks with more than $1 billion in assets to include a line item for overdraft and NSF fee revenue in their quarterly filings. 

“There was no comparable requirement for credit unions. As a result, no public and authoritative data on the overdraft and NSF fees paid by credit union members or by customers of banks with less than $1 billion in assets were available,” FHN said. “To estimate the amount of those fees, researchers and analysts have relied on data collected by the Consumer Financial Protection Bureau (CFPB) in 2015 covering 25% of credit unions and 60% of small banks. That data established an initial estimate of overdraft/NSF fees collected by small banks and credit unions, respectively.”

CFPB Estimates

The Financial Health Network said its  annual FinHealth Spend Report has used the CFPB’s 2019 estimate of credit union and small banks’ overdraft/NSF fees as the starting point for estimating fees paid by credit union members each year, as well as to estimate the total amount that all consumers pay in overdraft/NSF fees each year. 

“However, rather than assuming the percentage of overdraft/NSF revenue attributable to these institutions has held constant since 2019 – as the CFPB has done in its subsequent estimates – we assumed that the overdraft/NSF fee revenue of credit unions and small banks followed the same trend as the smallest banks included in the publicly reported data (those with $1 billion to $5 billion in assets),” it said in a statement. “Based on this approach, the FinHealth Spend Report 2024 estimated that in 2023, consumers paid $7.9 billion in overdraft/NSF fees, with 82% attributable to overdraft/NSF fees at banks and 18% attributable to overdraft/NSF fees at credit unions.”

The Revisions

Beginning in the first quarter of 2024, the Financial Health Network noted NCUA began requiring credit unions with over $1 billion in assets to include line items for overdraft and NSF fee revenue in their quarterly reports, aligning with the reporting requirements already in place for banks. Each credit union’s data was made publicly available. 

As the CU Daily reported, the organization noted NCUA has since reversed this decision and will no longer publish overdraft revenue data for individual credit unions beginning in 2025. 

‘Important Snapshot’

“Given this change, only one year’s worth of authoritative data for 445 credit unions will be available – providing an important snapshot of the fees charged across the market,” the organization said. “While these credit unions represent only around 10% of credit unions nationwide, they collectively account for approximately three-quarters of credit union members and approximately 80% of the assets and deposits held by all credit unions as of the fourth quarter of 2024. (In contrast, the data the CFPB had collected in 2015, and on which it based its subsequent estimates, covered only six credit unions with assets above $1 billion.)”

Drawing on these reports, the Financial Health Network said it has revised its estimate of the amount of overdraft and NSF fees consumers paid in 2023, and used the data to estimate the amount they paid in 2024.

Underestimation by CFPB

“Based on the newly available data, we now estimate the fees paid by credit union members in 2023 reflect 45% of total overdraft and NSF fees, rather than the 18% we previously estimated,” Financial Health Network stated. “The new data implies that the CFPB may have underestimated the share of overdraft and NSF fees attributable to credit unions in 2019. At the same time, the share of overdraft/NSF revenue attributable to credit unions since 2019 has likely increased, since between 2021 and 2023, most large banks either made significant reforms to how they charge overdraft or NSF fees or lowered their overdraft fees. 

“Although some credit unions have taken similar steps – for example, BECU, the nation’s fifth largest credit union, lowered its overdraft fee to $10 in 2022 – credit unions have generally been slower to make changes,” Financial Health Network stated in releasing its analysis. “For instance, of the banks with over $10 billion in assets, almost two-thirds stopped charging NSF fees by the third quarter of 2023 – including 27 of the top 30 recipients of overdraft/NSF fees in 2021. In contrast, only four of the 20 credit unions with assets above $10 billion stopped charging NSF fees between 2021 and the third quarter of 2023.”

The New Estimate

The Financial Health Network said it now estimates that in 2024, consumers of “very large financial institutions,” defined as banks and credit unions with over $10 billion in assets, paid $5.2 billion in overdraft fees. Of that amount, credit union members paid an estimated $735 million, or 14%. 

“The overdraft rule the CFPB issued in December would cover these large financial institutions and require them either to lower their overdraft fees or to follow stricter guidelines for their overdraft programs,” it added. 

According to the Financial Health Network, the newly available data highlight the ongoing significance of overdraft fees on consumer financial health, “reinforcing the need for more comprehensive and granular data to fully capture the costs of financial services on U.S. households. 

‘Accurate’ View is Needed

“The opportunity for robust public data resonates within the industry, too, with some leaders calling on credit unions to embrace transparency,” it continued. “Ensuring that overdraft programs and policies support consumer financial health requires an accurate and comprehensive view of the market.”