Bad spending habits like overdrawing a checking account are good for banks, and for technology and marketing companies trying to help them preserve billions of dollars in overdraft fees...
At stake are the more than $37 billion of fees related to overdraft payments last year, according to Moebs $ervices Inc., a Lake Bluff., Ill.-based company that tracks such data. About half that came from ATMs and debit-card charges. Banks charge an average of $27 for an overdraft fee, according to Moebs.
In recent weeks, banks have been barraging customers with emails, letters and telephone calls to encourage them to sign up for overdraft protection. About a quarter of bank customers recently surveyed by Nielsen Co. expressed interest in participating in bank overdraft programs.
Banks are most interested in getting frequent overdraft users to sign up for their programs. That is because roughly 75% of overdraft fees are generated by less than 20% of bank customers, according to industry statistics.
In March, more than 200 banks paid $199 each to participate in an Internet seminar hosted by David Peterson, a banking-industry consultant who advises banks to consider bundling overdraft protection with other services for a monthly fee. A 40-page presentation that accompanied his lecture includes a profile of a typical overdraft user, described as a person who doesn't pay attention to account balances, lives paycheck to paycheck, and will engage in a transaction despite knowing it will generate a fee.
The seminar also includes several pages detailing the "five stages of overdraft grief," which includes "shock and denial," "pain and guilt," "anger and bargaining," "depression" and "acceptance."
"I am helping banks to understand how the different types of customers are going to receive this message and how they should comply with the law," said Mr. Peterson.