Americans are paying far more in overdraft-related fees than previously known, with credit unions collecting almost all of the uncounted revenue, according to a new study.
U.S. households spent a total of $11.8 billion on overdraft and non-sufficient fund fees in 2023, according to the non-profit
Most of this 49% increase came from credit unions, according to the researchers.
Before last year, only banks with more than $1 billion of assets were required to publicly report their overdraft and NSF fee income; no such disclosure requirement existed for credit unions of any size.
Then, starting at the beginning of 2024, the National Credit Union Administration began holding credit unions to the same standard as banks. Those credit unions with more than $1 billion of assets had to
"Really, what's at play is a key new data source," said Hannah Gdalman, one of the study's authors. "So now we kind of have that equal vision into credit unions as we've had for banks, and have been able to revise our estimates accordingly."
This new data shows that credit unions took in far more revenue from bounced-payment penalties than experts had previously known. Originally, the Financial Health Network clocked credit unions' fee revenue for 2023 at $1.4 billion; now its estimate is $5.3 billion.
In 2024, the non-profit group estimates, Americans spent $5.4 billion on overdraft and NSF fees at credit unions, bringing the total for both banks and credit unions to $12.1 billion.
The study did not find that credit unions derive more revenue from overdraft fees than banks. Banks outpaced credit unions in terms of total overdraft-related fee revenue by more than $1 billion in both 2023 and 2024, the authors estimated.
The new numbers significantly clarify the picture of overdraft-related fees in the United States, Gdalman said. Until now, Financial Health Network had been basing its estimates of credit unions' overdraft fees partly on CFPB data from 2015 — which means its latest report relies on data that is a full decade more up-to-date than the previous one.
"Having accurate data is critical for us to assess the experiences of people in the financial marketplace, to understand what's going on with financial health for people in America," said Heidi Johnson, senior director of behavioral economics at the Financial Health Network.
In recent years, many larger banks have substantially reduced their reliance on overdraft-related fees. From 2019 to 2023, banks' total revenue from the penalties fell from $11.7 billion to $6 billion, according to a
Until recently, the trend at credit unions was more opaque.
"While banks have been kind of rolling back these overdraft policies, we suspect credit unions have been slower to do so," Gdalman said.
The new data appears to support that suspicion. It also lends evidence to the view of some critics that credit unions, despite their non-profit image, have a habit of gouging overstretched customers.
"My research has uncovered credit unions, including several of the largest, that have developed an addiction to overdraft products that mirrors the worst predatory banks," Aaron Klein, a senior fellow at the Brookings Institution,
Unfortunately for researchers, the new transparency will not last long. Under President Donald Trump's administration, the NCUA has reversed its earlier decision and will no longer require credit unions to report their overdraft-related fee income to the public, starting in 2025.
That runs counter to the recommendations of the Financial Health Network's study, which emphasizes "the need for more comprehensive and granular data" on the costs of financial services for average Americans.
"Access to comprehensive data and data that is updated on a regular basis is critical," Gdalman said. "We want to understand the cost for consumers, and access to publicly available data is a big piece of that."
