LAKE BLUFF, Ill.-The bigger the credit union or bank, the larger the overdraft price.
On average, that's what the numbers show, according to a recent survey by Moebs $ervices that indicates higher operating expenses drive higher OD prices. "We found that a financial institution's asset size has a direct correlation to what it charges for overdraft fees," explained Michael Moebs, CEO of Moebs $ervices.
The study shows that $29 is the median price for overdraft fees in the U.S. among all FIs. Banks with more than $5 billion in assets average $35 per overdraft, while banks below $100 million charge $25. "The big banks do this out of necessity," said Moebs. "The expenses-to-assets ratio for banks above $5 billion is 2.88%.
CUs with more than $5 billion charge $25, the same fee as credit unions below $100 million. Credit unions' OD prices are below banks in virtually all asset categories. While banks above $5 billion are at 2.88% expenses-to-assets, CUs of the same size stand at 2.31%. "The study shows large credit unions' expenses are 19.8% less than the banks, and CUs charge 29.6% less for overdrafts than banks," said Moebs.
Overdraft revenue among all FIs rose to $31.8 billion through Q3 2012. Moebs also observed that payday lenders' median price is $16, "because their costs are less..."
