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One-fourth Of Consumers With Checking Accounts Have Overdrafts
LAKE BLUFF, Ill. (4/2/13)--Consumers' use of overdrafts is increasing. More than one-fourth of people with a consumer checking account--about 38 million people--are frequent overdrafts users, said a new report.

Credit unions provide overdraft services as a service to their members and they charge less for the service than banks.  The survey, by Lake Bluff, Ill.,-based Moebs Services, a financial research firm, found that fees for services were lower at credit unions than at banks.

The average charge for an overdrawn account of $40 was $30 at banks, but $27 at credit unions. When depository size is taken into account, "the difference can be significant," said Michael Moebs, author of the study.

Overdraft revenue at banks, credit unions and thrift institutions totaled $32 billion last year, up $400 million or 1.3% from 2011, said the study.  Still, it was less than in 2008, when revenue from overdrafts totaled $35.4 billion, or in 2009, when it was $37.1 billion. Overdraft revenue during the first quarter of last year fell to an 11-year low.

Frequent overdraft users are divided into about 20 million consumers who use payday lenders and 18 million who use credit unions and banks. Payday lenders have dropped their overdraft fees, due to competition, said Moebs.

The increase in overdrafts will continue. At the rate of growth for the past nine months, overdraft revenue could be at an all-time high by the end of 2016, Moebs said.  "It's clear that overdrafts are going to be with us for a long, long time."
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