Wells Fargo’s Overdraft Income Grew 5 Times Faster Than Its Banking Peers
Wells Fargo’s income from overdraft charges grew by 7.5 percent in the third quarter of 2016. Compared to its national bank peers, that rate is more than 5 times the average and, ultimately, likely to be a point of concern for consumer banking regulators who have vowed to set new rules on overdrafts in the second half of 2017.
According to the Financial Times, the other top overdraft fee-earners in the country (JPMorgan Chase, Bank of America, TD Bank and US Bank) averaged a 1.3 percent increase in overdraft-related income.
Each of the five banks maintain a policy to charge a one-time overdraft fee of $34 to $36 on accounts that drop below a $0 balance.
Wells Fargo associated its third-quarter rise in overdraft income to the growing number of customers that are using their accounts for debit card purchases and online bill payments.
Financial Times notes the difference in overdraft income rates between San Francisco-based Wells Fargo and its competitors is likely to draw concern from the Consumer Financial Protection Bureau (CFPB). Last September, the CFPB fined Wells Fargo $100 million for its widespread practice of opening unauthorized accounts.
In April of last year, the Supreme Court stood behind a $203 million verdict that found Wells Fargo had manipulated debit card charges to maximize overdraft fees revenue.