Fifth Third Bancorp
) are set to hike the overdraft fees later this month. The hike
comes almost after the overdraft fees remained steady for a
According to a survey conducted by Consumer Federation of
America, many more banking institutions are about to follow this
trend. At present, the average overdraft fee is $35 at large U.S
Currently, Fifth-Third bank charges $25 for the first overdraft
transaction, $33 for the next three transactions, and then $37 for
the subsequent transactions. Later this month, the bank will begin
charging $25 for the first overdraft and $37 for the following
This significant hike in fees will affect the consumers who
overdraw multiple times in a year. However, Fifth-Third is
eliminating its $8 per day fee for overdrawn balances for three or
more days. The bank expects to make its fee structure more
transparent by adopting these changes.
Similarly, USB announced to elevate overdraft fees to $15 from
$10 for transactions worth $15 or less. Also, for transactions of
more than $15, it plans to hike the fee from $33 to $35.
Further, the bank has decided to eliminate early account closure
fees on checking, savings and Individual Retirement Accounts
(IRAs). The bank will not charge any fee for balances overdrawn by
$10 or less. As per the bank, the hike is a part of its general
assessment of deposit fees.
The overdraft fee hike comes as a major setback for customers,
who are already reeling under high fees. Consumers have always
condemned high overdraft fees, as an average consumer with standard
balance incurs overdraft multiple times in a year.
Earlier, banks used to fraudulently charge excessive overdraft
fees by processing transactions in order from largest to the
smallest. This received severe criticism from the customers, who
filed various lawsuits against several banks and demanded
compensation. Soon after, under the Dodd-Frank financial reforms,
it became mandatory for the banks to get approval of the customers
before charging for overdraft balance.
Clearly, the sudden rise in overdraft fee looks unfair to the
customers, as this will expose them to high costs for undertaking
the overdraft facility. As for the banks, this is a new means for
generating higher revenue.
Now the inflated fees that banks charge for smaller loans are
required to be repaid within a few days to stay away from
additional fee. This reflects the fact that the payday lending for
some customers will be a troublesome affair.
Currently, shares of Fifth-Third Bank retain a Zacks #2 Rank,
which translates into a short-term Buy rating. However, U.S Bancorp
retains its Zacks #3 Rank, which translates into a short-term Hold
FIFTH THIRD BK (FITB): Free Stock Analysis
US BANCORP (USB): Free Stock Analysis Report
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