Look out for higher overdraft fees

This post comes from Brian O'Connellat partner siteMainStreet.

For those of you who don't keep their eye on the fine print, there's some good news and bad news on the bank fee front.

Industry analyst Moebs Services reports that with fewer customers racking up overdrafts, bank fee revenues are down, so much so that financial institutions are increasing how much they charge in overdraft fees to make up for the shortfall.

That approach has been effective. A 2011 study from the Pew Health Group estimated that consumers paid out $38.5 billion in overdraft fees in 2011, with the average overdraft fee at $35. But now that the Federal Reserve has stepped in and required banks to make it easier for customers to opt out of overdraft protection, bank fee revenues are sliding downward again.

According to Moebs, which has different numbers than the Pew Study, total U.S. bank overdraft fees fell from $37 billion in 2009 to $29.5 billion in 2011. Seeing the handwriting on the wall, banks have hiked their overdraft fees by $2.50, which translates to $2 billion a year more for consumers who overdraw their checking accounts.

"We examined over 2,500 banks and credit unions in June 2011, and again in November 2011, and were absolutely taken aback by the price increases caused by the FDIC and proposed OCC Overdraft Guidelines," explains Michael Moebs, an economist and the CEO of Moebs Services. "In almost 30 years of collecting this data we have never seen an increase as high as $2.50 at one time, especially in a five-month period. When we asked banks why, the responses were all the same: to pay for the cost of overdraft regulation." Post continues below.

2011

Overdraft revenues: $29.5 billion

Average overdraft fee: $30

Overdrafts per household per year: 6.7

2010

Overdraft revenues: $33.1 billion

Average overdraft fee: $27.50

Overdrafts per household per year: 8.2

2009

Overdraft revenues: $37.1 billion

Average overdraft fee: $26

Overdrafts per household per year: 9.8

2008

Overdraft revenues: $35.4 billion

Average overdraft fee: $25

Overdrafts per household per year: 9.8

2007

Overdraft revenues: $34.6 billion

Average overdraft fee: $25

Overdrafts per household per year: 9.7

2006

Overdraft revenues: $32.1 billion

Average overdraft fee: $25

Overdrafts per household per year: 9.0

Consumers have clearly gotten the message on overdraft fees. Moebs shows that the average number of overdrafts fell by 18% from 2010 to 2011, and by 31% since 2009. That has led to a 10.6% drop in overdraft revenues from 2010 to 2011 and a 20.5% decline from 2009.

If high bank fees appear to be a problem for you, try taking these steps to mitigate -- or even eliminate -- those fees:

• Sign up for online banking and check your accounts a regular basis. Don't let your account balance drop below $100 -- just in case. If it does, put the checkbook and debit card away.
• Don't use another bank's ATMs. Those fees are listed separately on your bank statement, and could trigger an overdraft if you're not careful.
• Check out a credit union. Studies show that credit unions offer better deals on fees than big banks.

More on MainStreet and MSN Money:

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• 4 prepaid cards we'd rather see
• Banks keep piling on the overdraft fees
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