LAKE BLUFF, Ill.-The average number of overdrafts per household fell dramatically in 2011.
According to a recent Moebs $ervices study, overdrafts per household fell from 9.8 in 2009 to 6.7 last year.
"This is a decrease of 18% from the previous year, and a decrease of 31% from the peak in 2009," reported Michael Moebs, CEO and economist at Moebs $ervices. "Since the economy has been difficult for consumers since 2008, the need for short-term unexpected funds has not ceased for consumers. They have simply opted to seek funds from alternative sources such as family, pawn shops, friends, payday lenders, and loan sharks."
Banks and credit unions collectively had a 10.9% reduction in overdraft revenue from 2010, a drop of $7.6 billion, or 20.5% from the peak in 2009. "With rates forecasted to remain flat for another 30 months, banks and credit unions will have to charge more fees or reduce expenses. Since data shows that fee revenue is falling, banks and credit unions may be forced to take deep cost-cutting measures, including adding to the unemployment lines."
Moebs added, too, that credit unions can drop overdraft pricing to grab checking share from banks, and increase overdraft volume and overdraft revenue.
