Punitive Fees Under Threat

By Mark Brousseau

Bank revenues generated by punitive fees, such as for overdrafts, may be under threat, analysts from New York-based First Manhattan Consulting Group (FMCG) write in the January/February issue BAI Banking Strategies.

FMCG estimates overdraft fees alone total almost $20 billion per year and have been growing quickly as many banks have allowed customers to overdraft in more complicated ways – such as through debit, online bill payment and automated teller machine (ATM) withdrawals.

But FMCG believes the growth of fee revenues will slow as punitive fees begin to draw the attention of Congress and as legislation is adopted that requires banks to notify customers before imposing an overdraft fee.

What do you think? E-mail me at m_brousseau@msn.com.