Who gets hit hardest by bank overdraft fees?

Perhaps the most despised bank fee among consumers is the overdraft fee, an ugly $30 (or so) insult to your wallet.

Many consumers have been hit with it at one time or another, usually when it’s the absolute last thing they need. The depth of consumer disgust for such a high fee is, alas, equally matched by the abiding love banks, thrifts, and credit unions have for the billions of dollars in annual revenue they provide.

Overdraft services began decades ago as a simple service for customers without calculators: If you didn’t have enough money to cover a check, your bank saved you from bouncing it.

But we’re talking banks, here, so nothing is for free. A new report from the Consumer Financial Protection Bureau shows just how much of a bite overdraft fees can take out of some consumers, and provides new prototype disclosure forms it hopes banks and credit unions will adopt.

The CFPB examined overdraft fees on debit cards and ATM withdrawals for people who frequently find themselves overdrawn on their checking accounts. Among those who paid 10 overdraft or non-sufficient fund (NSF) fees a year, those who opted into a bank’s overdraft service paid as much as $450 more in fees than those who had similar behavior but who didn’t opt in to overdraft coverage.

Frequent overdrafters who opted in paid $450 more annually then those who didn’t. Those consumers made up 9 percent of the 40 million accounts the CFPB studied at a small number of large banks, and they paid 79 percent of the banks’ total overdraft and NSF fees. A 2014 Pew Charitable Trusts study found that in 2013 “10 percent of Americans paid at least one overdraft penalty, and another 5 percent paid an overdraft transfer fee.”

What makes this all particularly perverse is that the CFPB estimated in previous studies that most debit card transactions leading to overdrafts are $24 or less. That small overdraft, however, can lead to a…

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