Consumers Skeptical of Overdraft Protection

May 20, 2010

This article is included in these additional categories:

Analytics, Automated & MarTech | Data-driven | Financial Services | Regulatory | Women

Most bank customers are unaware of new regulations requiring opt-in overdraft protection, and are unlikely to pay a fee for the service, according to a recent Harris Poll.

Three in Four Consumers Know Little or Nothing
Only one-quarter (27%) of consumers claim to know all about the new regulations. Most have just heard a little (37%) or never heard of the changes (36%), meaning the banks still have work to do with their customers. This general lack of awareness of overdraft fees probably derives from the fact that only one in five Americans (19%) report having ever overdrawn their account within the past year.


More than Half of Consumers Unlikely to Opt In
Banks who want to charge a fee for opt-in overdraft protection (which is allowed under the new regulations) may face significant consumer resistance. A net 51% of consumers are unlikely to opt in with a fee. Of that percentage, 34% are not at all likely to opt in. Only a net 29% are likely to opt in, with 15% being somewhat likely and only 5% being extremely likely. Another 20% of consumers say they need more information, further suggesting banks need to make more effort to educate consumers about changes in overdraft regulations.


Married Women and Moms Most Likely to Opt In
When female consumers are examined separately, it becomes clear that marriage and children makes them more likely to opt in to a fee-based overdraft protection program. A net 31% of married women are likely to opt in, and a net 45% are unlikely to opt in. Segregated by whether they have children in their household, a net 35% of women with children in their household are likely to opt in and a net 41% are unlikely.

Meanwhile, 27% of women without children in their household are likely to opt in and 56% are unlikely. Single women are least likely to opt in (23%), though not quite as unlikely (52%) as women without children in their household.

Consumers Feel Taken Advantage Of
A net 68% percent of consumers agree with the statement “I feel that banks have been taking advantage of their customers by charging fees without getting explicit consent to do so,” and only a net 13% disagree. A net majority of consumers (57%) would like the ability to decide whether or not to receive overdraft protection on the spot. Only a net 39% of consumers think overdraft protection is a valuable service, and a net 31% think it makes overspending too easy.


Complete Belief in Financial Institutions Low
In a further sign that banks and other financial institutions face a large amount of consumer distrust, very few Americans find statements by financial institutions completely believable, according to another recent Harris Poll. Accounting firms generated the highest percentage of Americans who find statements by their spokespeople completely believable, which was only 5%. A mere 2% of Americans find statements from investment firms, health insurance companies, mortgage companies and credit card companies completely believable.

Accounting firms also generated the highest net percentage of consumer belief in their statements (combining those who find their statements somewhat believable with those who find their statements completely believable) – 67%. Banks followed with 62%. At the other end of the spectrum, government agencies that regulate financial institutions generated net belief of 47%, and credit card companies came in last with 36% net belief in their statements.

About the Data: This Harris Poll was conducted online within the United States between April 12 – 19, 2010 among 2,755 adults (aged 18 and older). Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Where appropriate, these data were also weighted to reflect the composition of the adult online population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.


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