(FORBES) — Overdraft charges may not top the list of features you inspect carefully when you choose a bank, but they probably should be, at least according to new data from a study out today.
What started as a courtesy designed to help bank customers cover withdrawals even when they lack sufficient funds has ballooned into a cottage industry for American banks. The largest U.S. banks (those with assets exceeding $1 billion) charged $11.6 billion in overdraft charges and insufficient fund fees in 2015, according to a report released today by the Pew Charitable Trusts. These types of charges on deposit accounts have more than doubled over the past 30 years.
Not surprisingly, the report also finds that those most financially vulnerable bear most of the costs: Just one-fifth of banking customers pay 90% of those fees, Pew found. Most of them earned less than $50,000 a year.
“The majority of consumers who pay these billions of dollars in overdraft fees are younger and low income,” says Joy Hackenbracht, a research officer with Pew’s consumer banking project.
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