The Rapid Demise of NSF Fees for Nation's Largest Banks

Source: American Banker

Last year at this time, all but two of the 20 largest commercial banks in the nation charged fees to consumers whose accounts did not have enough money in them to pay for certain purchases.

Today nonsufficient-funds fees, which are also sometimes called returned-item fees, are largely a thing of the past among the top 20 banks. Thirteen of them have ditched NSF fees as part of broader overdraft reform and four more are scheduled to do the same by the end of this year, according to an American Banker analysis of the banks' policies around consumer NSF fees.

On Thursday, the Federal Deposit Insurance Corp. issued guidance to FDIC-supervised banks to reduce multiple NSF charges on the same unpaid transaction that gets repeatedly presented and denied.

The demise of NSF fees at many large and regional banks — which has come amid a tidal wave of reforms of banks' overdraft practices — has been particularly swift in an industry not historically known for rapid change. It kicked off in April 2021 when PNC Financial Services Group in Pittsburgh introduced a digital alert service called Low Cash Mode that warns consumers about upcoming payments that will drive their balance below zero. At the same time, the $544 billion-asset company eliminated NSF fees for all consumers who enrolled in the service.