How Will Major Banks Be Affected by Decrease in Loan Deposit Fee?

  How Will Major Banks Be Affected by Decrease in Loan Deposit Fee? Overdraft Fees Under Review In Recent Weeks! Analysts, who believe banks will face more pressure going forward, and politicians who oppose high wages from the vulnerable population are raising criticism of the decision. The first major bank to end the application was Ally Bank!

What is the Importance of Overdraft Account Fees on Profit and Income?

Customers have to pay deposit fees in cases where their account transactions exceed a certain amount, but part of the difference has to be covered by the bank. Based on data collected by S&P Global Market Intelligence, total U.S. banking system overdraft fees in 2020 were $8.82 billion, out of a total net income of $147.8 billion. It's still worth examining how much these fees add to the total revenue of the four largest US banks.

How Will Major Banks Be Affected by Decrease in Loan Deposit Fee?

Frankly, these fees are not considered a large part of the total revenue of the largest US banks. JPMorgan Chase collected the highest overdraft fees of the four major banks in 2020, with overdraft fee revenues accounting for just 1,2 % of its total revenue. Once the Overdraft Fee is eliminated, it is clear that JPMorgan will not see much impact from this loss. Analyzes showed that these cut fees generate far less total revenue for large banks than they do to regional banks.

Not Pointless, But Not Important!

When you consider that a small percentage of the tens of billions of dollars is still a lot of money, the fact that overdraft fees result in clearly visible income becomes clear. But for the big four US banks, it's not as important as making or not making an essential investment decision. It does not even generate good income for some regional banks. It should not be forgotten that banking is a relationship business, no bank would risk the trust that can be established with its customers in the future. However, when investing in bank stocks, it is worth paying attention to how much income is generated from overdraft fees.  

Source: The Motley Fool

 

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