Study Finds Checking Overdraft Fees Wipe Out up to 145% of Potential Returns
A GoBankingRates.com study compares median overdraft fees, which stand at $30, with average checking account rates, which have decreased to 0.27% APY in the last year.
LOS ANGELES, Nov. 12, 2013 /PRNewswire/ -- Comparing average checking account interest rates with overdraft fees by region, GoBankingRates.com found depositors can expect to lose between 96.67% and 145.00% of their return on a $10,000 deposit with a single overdraft.
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To see the full study, go to http://bit.ly/17QqQ56.
The report examines interest rates and fees by region to find where depositors' earnings are hardest hit.
GoBankingRates editor Jennifer Calonia explained, "Depositors need to understand that incurring just one overdraft fee will wipe out all interest earned for an entire year -- and then some."
Calonia, who authored the report, added, "The good news is overdraft fees are 100 percent controllable and avoidable by the account holder."
To see a list of the nation's highest checking account rates, go to http://bit.ly/HJpqgm.
Key Findings
- The average checking account rate in the U.S. is 0.27% APY; the median overdraft fee is $30.
- Credit unions offer higher rates, lower overdraft fees on average.
- The West is home to the widest rate-to-fee gap, while the Midwest is the only region where median fees are lower than potential returns.
Checking Account Rates Versus Fees
| Average Checking Account Rate |
Return on $10,000 Deposit* |
Average Overdraft Fee |
% of Total Return |
||
| Region (U.S.) |
|||||
| West |
0.20% |
$20 |
$29 |
145.00% |
|
| Midwest |
0.30% |
$30 |
$29 |
96.67% |
|
| East |
0.27% |
$27 |
$30 |
111.11% |
|
| South |
0.29% |
$29 |
$30 |
103.45% |
|
| Institution Type |
|||||
| National |
0.27% |
$27 |
$30 |
111.11% |
|
| Banks |
0.26% |
$26 |
$30 |
115.38% |
|
| Credit Unions |
0.32% |
$32 |
$28 |
87.50% |
|
|
Sources: GoBankingRates.com: Interest Rate Data Moebs $ervices: Overdraft Fee Data *Assumes interest is compounded annually |
|||||
About This Study
Checking account data referenced in this study is compiled from the GoBankingRates.com database, which, in partnership with Informa Research Services, Inc., aggregates interest rate data from thousands of U.S. banks and credit unions. More than 2,780 checking accounts were reviewed. All rates are accurate as of Nov. 11, 2013, based on a $10,000 deposit.
Overdraft fee data was compiled from a July 2013 Moebs $ervices report.
About GoBankingRates.com
GoBankingRates.com is a personal finance website that connects consumers with the best interest rates nationwide. Its editors have been featured on several top media outlets such as U.S. News, Yahoo! Finance, Forbes, CBS MoneyWatch, Huffington Post and more.
Contact
Connie Lundegard
[email protected]
310.297.9233 x112
SOURCE GoBankingRates.com
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