How 2022 hastened the decline of overdraft fees

What started as a trickle of overdraft-fee policy changes in 2021 became a flood in 2022 as a growing number of large and midsize banks made their policies more consumer-friendly.

The list includes megabanks like Citigroup, which this year became the largest U.S. bank to eliminate overdraft fees entirely, and Wells Fargo, which recently launched a new small-dollar loan program to help customers avoid overdraft charges.

It also includes regional banks such as Charlotte, North Carolina-based Truist Financial, which dropped all fees tied to transactions that get rejected because the customer lacks sufficient funds, as well as charges for overdraft protection transfers.

The pressure on banks to reform overdraft policies has been mounting for years, with consumer advocates and lawmakers arguing that such policies are particularly harmful to lower-income customers. More recently, Biden-era regulatory changes and competition from lower-cost online competitors have put pressure on large banks to reconsider their strategies.

Here’s a look back at American Banker coverage from 2022 that highlights the evolution of overdraft policy.