Banks and credit unions throughout Illinois may charge fees when you overdraft your account or otherwise have insufficient funds to complete a transaction. As you may imagine, an overdraft occurs when a purchase exceeds your available checking or savings account balance. Although such fees are common, data from the Overdraft and Nonsufficient Funds report suggests that many consumers still have a limited understanding of how they work.
What the Consumer Financial Protection Bureau found
The Consumer Financial Protection Bureau (CFPB) found that only 22% of households involved the report knew that they would incur an overdraft fee. However, the report suggests that those who frequently overdraw their accounts are less likely to be surprised when hit with a fee. Finally, it discovered that households making less than $65,000 were three times as likely than households making more than $175,000 to overdraw their accounts or incur nonsufficient funds (NSF) fees.
The link between fees and household finances
The report found that 81% of households who incurred an overdraft or NSF fee had trouble paying their bills compared to those who did not. However, it was determined that many included in the report lacked sufficient credit issues to prevent them from using a credit card. Over half of those who incurred more than 10 such fees in a year had access to a credit card or some other form of credit.
If left unpaid, a negative savings or checking account balance could result in multiple late fees. It might also result in the closure of your account and the unpaid balance being sent to collections. Your bank or credit union may be able to explain why a fee was incurred or suggest ways to avoid them in the future.