Inflation is surging, leading many Americans to find that their dollar doesn’t go as far as it once did. This adds to the unprecedented challenges introduced by the COVID-19 pandemic and forces a staggering 64 percent of the U.S. population to live paycheck-to-paycheck. Reducing this point of stress should be a priority for financial institutions. One simple yet powerful way to start is by doing away with overdraft fees. Half of U.S. adults say they have overdrafted their bank account in the past, and almost one in five have done so within the past twelve months. In 2020 alone, Americans paid more than $12 billion in overdraft fees.
Congress debated the future of these fees last week, and will continue to. As it does, it’s important to keep in mind that research shows overdraft fees disproportionately affect those who can least afford them. According to one study from Harvard Business School, overdraft fees actually represent a majority of bank account fees borne by low-income consumers.
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