Parliamentarians blamed banks for the money they earned from overdraft fees last week. However, overdraft revenues turned out to decline in 2020 for the first time in six years.
Why? When the Covid-19 epidemic, there was nowhere to go, so many people kept their spending down. Exciting money helped them fill their bank accounts. Banks were also more generous about exempting fees.
According to financial data firm Moves Services, financial firms generated an estimated $ 31.3 billion in consumer overdraft revenue in 2020, down nearly 10% year-on-year. According to Moves, the number of overdrafts in 2020 fell from more than $ 1 billion in about 20 years to less than $ 1 billion, with a median fee of $ 30 last year.
Lower overall fees are another example of how Covid-19 changed consumer finance in amazing ways. At the beginning of the pandemic, US lenders were afraid of a significant increase in delinquency. But since then, the government has expanded unemployment benefits and implemented stimulus measures, allowing many to save money and repay their debts. Many banks have exempted overdraft fees, especially early in the pandemic.
All types of fees are important to a bank’s bottom line, especially in years when low interest rates reduced the profitability of loans and demand for loans was low. If the government’s stimulus package ends, more people may accumulate overdraft fees.
Overdraft fees reduced in Covid-19 economy
Source link Overdraft fees reduced in Covid-19 economy