Saving money harder as overdraft fees climb

As more American struggle with saving money and dealing with their personal finances, a new study shows that banks and credit unions increased their income from overdraft fees.

The study, which was done by Center for Responsible Lending (CRL), shows that financial institutions made almost $24 billion in overdraft fees during last year, which represents a 35 percent jump from two years before. The study shows that 51 million Americans may have felt the effects of overdraft fees.

Leslie Parrish, a senior researcher for CRL, noted that banks and credit unions have gotten very advanced in their ways of collecting fees, which leads some consumers to pay more for them than they might for everyday expenses.

“These billions of dollars drained from consumers each year represent lost opportunities for families to save for a rainy day or buy necessary goods and services that could help spark the economy,” Parrish said.

Recently, Senate Banking Committee Chairman and Connecticut Democrat Chris Dodd announced he is drafting legislation that would combat the practice of enrolling consumers into “courtesy” overdrafts. Through the practice, banks allow transactions to go through even if consumers don’t have the money to cover them, and then charge a fee for doing so.