FDIC Study

of Bank 

Overdraft 

Programs

November 2008

Federal Deposit 

Insurance Corporation
FDIC S November tud 2008 y of Bank Overdraft Pogams  n  November

Executive Summary

In 2006, the Federal Deposit Insurance Corporation (FDIC) initiated a two-part study to gather empirical data on the types, characteristics, and use of overdraft programs operated by FDIC-supervised banks. 

The study was undertaken in response to the recent rapid growth in the use of automated overdraft 

programs, defined as programs in which the bank honors a customer’s overdraft obligations using standardized procedures to determine whether the nonsufficient fund (NSF) transaction qualifies for overdraft coverage. Little empirical data have been available on these programs, their features, their 

managing practices, the fees imposed, and consumer usage patterns.

Data and information for the FDIC’s study were gathered through a survey of a sample of institutions 

representing 1,171 FDIC-supervised banks, and a separate data request of customer account and transaction-level data from a smaller set of 39 institutions.1

 The two-part study was designed to obtain the 

following types of information related to overdraft programs: characteristics, features, and fees of overdraft programs; transaction-processing policies; marketing and disclosure practices; internal controls and 

monitoring practices; the role of vendors and third parties in overdraft program implementation; and 

NSF-related fee income and growth. The customer account and transaction-level data collection was 

designed to gather information on the provision of overdraft services on customer accounts, the occurrence of NSF activity covered under automated overdraft programs, and the characteristics of customer 

accounts that tend to incur the highest volume of overdraft fees. It was also designed to identify specific 

aspects of overdraft program use that may be appropriate for more rigorous quantitative inquiry.

The FDIC believes that objective information on these programs will help policymakers make betterinformed policy decisions and will help the public better understand the features and costs related to 

automated overdraft programs. The study results also will help the banking industry develop more effective overdraft programs to better serve consumers.

This report provides key study findings pertaining to the growing provision of automated overdraft 

programs, enrollment practices, credit limits and fees, marketing and disclosure practices, transaction 

processing, and NSF-related revenues. Results from the account and transaction-level data collection are 

also included in this report based on the data received from the 39 banks. These latter results suggest 

areas that may benefit from further study.

Key findings from the survey of 462 FDIC-supervised banks are as follows:

1. The majority (86.0 percent) of banks operated at least one formal overdraft program—either 

automated, linked accounts, or lines of credit (LOC).2 Large banks (defined as those with at least 

$1 billion in assets) tended to offer a fuller menu of overdraft programs. The share of all banks offering automated overdraft programs was 40.5 percent, but large banks were also significantly more 

likely to operate automated overdraft programs (76.9 percent), suggesting that a significant share of 

customer transaction accounts operated under automated overdraft programs.

1 The study population was 1,171 FDIC-supervised institutions scheduled for on-site examinations from May through December 

2007 and FDIC-supervised institutions with at least $5 billion in assets. The survey was administered to a stratified, random sample 

of 462 institutions from the study population. The 39 banks from which transaction data were received were a nonrandom subset 

of the 462 banks surveyed; therefore, the results are not generalizable beyond the 39-bank sample. See Section II, Methodology, 

for a more detailed discussion of the study methodology.

2 Automated overdraft programs are usually a computerized program by which the bank honors a customer’s overdraft obligations using standardized procedures or a matrix to determine whether the NSF occurrence qualifies for the overdraft coverage. 

Linked transfer accounts (linked-accounts) are defined as a contractual agreement between a bank and a customer, linking the 

customer’s transaction account with other accounts within the bank, including savings and credit card accounts. Overdraft lines 

of credit (LOCs) are contractual agreements between a bank and a customer stating that the bank will lend up to a specified 

amount over a defined period to cover overdraft items.
FDIC Study of Bank Overdraft Pogams  n  November 

Executive Summary

2. The number of FDIC-supervised institutions providing automated programs has grown rapidly over 

the past several years. Most banks (69.4 percent) initiated their automated overdraft programs after 

2001. Large banks were more likely (55.4 percent) to have had an automated overdraft program in 

place in 2001.

3. Most banks (75.1 percent) automatically enrolled customers in automated overdraft programs, 

although customers were usually permitted to affirmatively opt out of the program. Survey 

comments indicated that in some cases, customers were not given the choice to opt in or out of the 

automated program.

4. By contrast, almost all banks (94.7 percent) treated linked-account programs as opt-in programs, 

requiring that customers affirmatively request to have accounts linked. In addition, customers have 

to apply and qualify for an overdraft LOC program, so these programs typically operate on an opt-in 

basis.

5. Most banks (73.0 percent) established credit limits for automated overdraft customers in written 

policies, consistent with the bank’s lending program. Automated overdraft credit limits stipulated in 

these policies ranged from $85 to $10,000, and the median credit limit was $500.

6. Automated overdraft usage fees assessed by banks ranged from $10 to $38, and the median fee 

assessed was $27. About one-fourth of the surveyed banks (24.6 percent) also assessed additional 

fees on accounts that remained in negative balance status in the form of flat fees or interest charged 

on a percentage basis.

7. Fees assessed for linked-account and overdraft LOC programs were typically lower than for automated overdraft programs. Almost half of the banks with linked-account programs (48.9 percent) 

reported charging no explicit fees for the service. The most common fee associated with linkedaccount programs was a transfer fee; where charged, the median transfer fee was $5. The primary 

cost associated with overdraft LOC programs was the interest charged on funds advanced, usually 

accruing at an annual percentage rate (APR) of around 18 percent.

8. The majority (81.0 percent) of banks operating automated programs allowed overdrafts to take place 

at automated teller machines (ATMs) and point-of-sale (POS)/debit transactions. However, most 

banks whose automated overdraft programs covered ATM and POS/debit transactions informed 

customers of an NSF only after the transaction had been completed (88.8 percent of banks for 

POS/debit transactions and 70.7 percent of banks for ATM transactions). A minority of banks 

(7.9 percent for POS/debit and 23.5 percent for ATMs) did inform consumers that funds were insufficient before transactions were completed at these locations, offering the customers an opportunity 

to cancel the NSF transaction and avoid a fee.

9. A significant share of banks (24.7 percent of all surveyed banks and 53.7 percent of large banks) 

batched processed overdraft transactions by size, from largest to smallest, which can increase the 

number of overdrafts.

10. More than half of banks with automated overdraft programs (54.2 percent) reported that they relied 

on a third-party vendor to implement or manage the program. Small banks (those with less than 

$250 million in assets) were more likely to rely on vendors and third parties for automated overdraft 

program implementation and management. Most banks using vendors to manage their automated 

overdraft programs (70.6 percent) also reported that they paid third-party vendors a percentage of 

the fees generated by the program, typically 10 to 20 percent of additional fees generated.

11. The banks earned an estimated $1.97 billion in NSF-related fees in 2006, representing 74 percent 

of the $2.66 billion in service charges on deposit accounts reported by these banks in their Reports 

of Conditions and Income (Call Reports).3 Total NSF-related fee income accounted for roughly 

3 Banks were asked to report annual NSF-related fee income associated with the processing of all NSF transactions. Fee 

income data cited are estimates for study population banks only and do not represent estimates for other segments of the banking 

industry. 
FDIC Study of Bank Overdraft Pogams  n  November

Executive Summary

6 percent of the total net operating revenues earned by the banks. Banks operating automated overdraft programs earned $1.77 billion in NSF fees in 2006, accounting for 90 percent of total NSFrelated fee income earned by the entire study population.

12. Banks that operated automated overdraft programs had higher NSF-related fee income (measured as 

a share of operating revenues) compared with other banks. In addition, banks whose automated 

program covered ATM and/or POS/debit transactions and banks that batch processed transactions 

largest-to-smallest reported higher fee income than those that did not have these features.

13. Consumer complaints about automated overdraft programs were received by 12.5 percent of banks 

that operated these programs, compared with consumer complaints from less than 1.0 percent of 

banks offering linked-account programs and 1.5 percent of banks offering overdraft LOC programs. 

Complaints about automated overdraft programs were more common for large institutions than for 

small institutions (21.7 percent versus 10.6 percent).

14. Automated overdraft programs operated by banks were characterized as either “promoted” or 

“nonpromoted.”4 The survey results revealed important differences in bank marketing and disclosure practices between automated and nonautomated overdraft programs. However, in most cases 

survey disclosure results regarding automated overdraft programs applied only to promoted 

programs. Although banks that operated nonpromoted automated overdraft programs accounted 

for a minority (8.5 percent) of banks, these banks were typically large and accounted for more than 

half (51.7 percent) of the transaction account dollars held by all banks.

Results from the analysis of micro-level data from 39 banks with aggregate assets totaling 

$332 billion and 6.5 million customer accounts are as follows:5

1. Micro-data banks reported 22.6 million NSF transactions incurred by consumer accounts during the 

12-month period of analysis. Almost all (22.5 million) of the NSF transactions analyzed were 

reported by banks that operated automated overdraft programs.

2. Although almost 75 percent of consumer accounts had no NSF transactions during the 12-month 

period examined, almost 12 percent of consumer accounts had 1 to 4 NSF transactions, 5.0 percent 

had 5 to 9 NSF transactions, 4.0 percent had 10 to 19 NSF transactions, and 4.9 percent had 20 or 

more NSF transactions. Almost 9 percent of consumer accounts of banks reporting data had at least 

10 NSF transactions during the 12-month period of analysis.6

3. Customers with 5 or more NSF transactions accrued 93.4 percent of the total NSF fees reported for 

the 12-month period. Customers with 10 or more NSF transactions accrued 84 percent of the 

reported fees. Customer accounts with 20 or more NSF transactions accrued over 68 percent of the 

reported fees.

4. Customer accounts with 1 to 4 NSF transactions were charged $64 per year in NSF fees on average. 

Customer accounts with 5 to 9 NSF transactions were charged $215 per year in NFS fees on average. Customer accounts with 10 to 19 NSF transactions were charged $451 per year in NFS fees on 

average. Customer accounts with 20 or more NSF transactions were charged $1,610 per year in NSF 

fees on average.

4 “Promoted” automated overdraft programs are those in which the customers are informed of the existence of the overdraft 

program. “Nonpromoted” automated overdraft programs are those in which customers are not informed of the existence of the 

overdraft program.

5 Bank assets reported as of December 2006. 6 For this study, NSF transaction data include NSFs covered by an automated overdraft program and returned or unpaid, as well 

as NSFs processed on an ad hoc basis, although nearly all NSFs were reported by banks that operated automated overdraft 

programs. Data on NSF transactions processed under linked-accounts or LOC programs were not collected.
FDIC Study of Bank Overdraft Pogams  n  Novembe

Executive Summary

5. Accounts held by customers in low-income areas (in some areas, median annual income of less than 

$30,000) were more likely than accounts in higher-income areas to incur overdraft charges.7 More 

than 38 percent of low-income accounts had at least one NSF transaction, compared with 22 

percent of upper-income accounts.

6. Recurrent overdrafts were also more likely the lower the income group. Among low-income customers, 16.7 percent of accounts had 1 to 4 NSF transactions, and 7.5 percent had 20 or more NSF 

transactions. By comparison, 13.9 percent of accounts held by moderate-income consumers had 1 to 

4 NSF transactions, and 6.4 percent had 20 or more NSF transactions. Consumers in upper-income 

areas had 1 to 4 NSF transactions in 10.5 percent of accounts and 20 or more NSF transactions in 

3.8 percent of accounts.

7. Almost half (48.8 percent) of all reported NSF transactions took place at POS/debit (41.0 percent) 

and ATM (7.8 percent) terminals. Checks accounted for 30.2 percent of the reported NSF 

transactions.

8. The median dollar amount of all 22.5 million transactions processed by the micro-data banks with 

automated overdraft programs was $36. POS/debit NSF transactions were not only the most 

frequent, but also the smallest, with a median dollar value of $20. The median transaction size of an 

ATM withdrawal and a check that resulted in an NSF transaction were $60 and $66, respectively.

9. Assuming a $27 overdraft fee (the survey median), a customer repaying a $20 POS/debit overdraft 

in two weeks would incur an APR of 3,520 percent; a customer repaying a $60 ATM overdraft in 

two weeks would incur an APR of 1,173 percent; and a customer repaying a $66 check overdraft in 

two weeks would incur an APR of 1,067 percent. More rapid repayment of the overdraft amount 

results in higher APRs, and slower repayment results in lower APRs.8

10. Accounts held by young adults (ages 18 to 25) were the most likely among all age groups to have 

automated overdraft NSF activity. Among young adult accounts, 46.4 percent incurred NSF activity, compared with 12.2 percent of accounts held by seniors (over age 62) and 31.9 percent of 

accounts held by other adults. Nearly 15 percent of accounts held by young adults recorded more 

than ten NSF transactions during the year, compared with 12.1 percent of adult accounts and 3.0 

percent of senior accounts. Most NSF transactions made by young adult accounts (61.7 percent) 

originated at a POS/debit terminal.

7 Actual median income limits for each income level designation vary by metropolitan statistical area. The income limit provided 

is a benchmark calculated based on the 2006 median family income for the United States. (Source: U.S. Census Bureau, 2006 

American Community Survey.) 8 These examples assume that the credit extended as a result of the overdraft occurrence equaled the total transaction, that 

the consumer repaid the credit extended in two weeks, and that no additional fees are imposed on the consumer as a result of the 

NSF. The APRs were calculated as follows: ((Fee Charged/Amount Financed)*365)/Term (14 days).
FDIC Study of Bank Overdraft Programs

Table of Contents

Executive Summary ii

I. Introduction 1

II. Methodology 1

II.1. Overdraft Survey Methodology 2

II.2. Micro-Level Data Methodology 3

Part One—Overdraft Survey 5

III. Overview of Overdraft Programs 5

III.1. Programs Operated 5

III.2. Account and Transaction Coverage 8

III.3. Transaction Processing Practices 11

III.4. Summary 12

IV. Overdraft Fees and Credit Limits 13

IV.1. Automatic Overdraft Program Fees and Coverage Limits 13

IV.2. Fees on Linked-Account Programs 19

IV.3. Fees, APRs, and Credit Limits on Overdraft LOCs 21

IV.4. Summary 24

V. Customer Enrollment, Marketing, and Disclosure Practices 25

V.1. Offering Overdraft Programs to New Customers 25

V.2. Enrollment in Overdraft Programs 27

V.3. Providing Comparative and Educational Information to Consumers 27

V.4. Product Line Information Provided to Consumers 30

V.5. ATM and POS/Debit Balance Disclosures 38

V.6. Summary 42

VI. Internal Controls and Monitoring Systems 43

VI.1. Written Policies 43

VI.2. Compliance Review Prior to the Implementation of the Overdraft Program 45

VI.3. Methods for Monitoring and Evaluating Overdraft Programs 46

VI.4. Ongoing Customer-Level Monitoring of Overdraft Programs 48

VI.5. Summary 50

VII. The Role of Vendors and Third Parties in Overdraft Practices 50

VII.1. Vendor Usage 51

VII.2. Vendor Compensation Structure 53

VII.3. Summary 55
FDIC Study of Bank Overdraft Pogams  n  November 

Table of Contents

VIII. Growth and Profitability of Overdraft Programs: The Importance of 

NSF-Related Fee Income for Bank Earnings 55

VIII.1. Income Share Results 56

VIII.2. Fee Income as Shares of Deposits 59

VIII.3. Charged-Off and Restructured Accounts 62

VIII.4. Net Fee-Income Ratios 65

VIII.5. Trends in NSF-Related Fee Income 65

VIII.6. NSF-Related Fee Income and the Adoption of Automated Overdraft Programs 67

VIII.7. Summary 68

Part Two—Micro-Level Data 70

IX. Micro-Level Data: Consumer Overdraft Usage 70

IX.1. Overview of Overdraft Programs Operated and Account Coverage of Micro-Data Banks 70

IX.2. Characteristics of Automated Overdraft Programs Operated by Micro-Data Banks 72

IX.3. Patterns of NSF Activity and Fees for Micro-Data Banks with Automated Overdraft Programs 76

IX.4. Summary 81

FDIC Study Group on Bank Overdraft Programs 83

Appendix A FDIC Overdraft Protection Survey I A-1

Appendix B FDIC Overdraft Protection Survey II B-1

List of Tables and Figures

Table II-1 Sample Summary 3

Table III-1 Formal Overdraft Programs Operated 5

Table III-2 Menu of Overdraft Programs Operated 6

Table III-3 Promoted and Nonpromoted Automated Programs 7

Figure III-1 Distribution of Study Population, by Automated Overdraft Programs Operated 7

Figure III-2 Distribution of Transaction Account Dollars Held in Study Population by Automated 

Programs Operated 7

Table III-4 Banks with a Formal Overdraft Program Implemented by 2001 8

Table III-5 Accounts Covered by Formal Overdraft Programs 9

Table III-6 Account Coverage by Multiple Overdraft Programs 9

Table III-7 Order Overdraft Programs Invoked 10

Table III-8 Transactions Covered by Formal Overdraft Programs 10

Table III-9 Batch-Processing Methods 11

Table III-10 Transactions Paid First 12

Table IV-1 The Incidence of Fees Charged by Automated Overdraft Programs 14

Table IV-2 Usage Fees for Automated Overdraft Programs 14

Table IV-3 Per-Item Fees Charged by Automated Overdraft Programs 15

Table IV-4 Initiation and Maintenance Fees for Automated Overdraft Programs 17

Table IV-5 Features of Usage-Related Fees for Automated Overdraft Programs 17
FDIC Study of Bank Overdraft Pogams  n  November 2

Table of Contents

Table IV-6 Credit Limits of Automated Overdraft Programs 18

Table IV-7 NSF Fees Charged by Study Population Banks 18

Table IV-8 The Incidence of Fees Charged by Linked-Account Overdraft Programs 19

Table IV-9 Fees for Linked-Account Overdraft Programs 20

Table IV-10 Features of Linked-Account Transfer Fees 21

Table IV-11 The Incidence of Noninterest Fees Charged by Overdraft LOC Programs 22

Table IV-12 Noninterest Fees Charged by Overdraft LOC Programs 23

Table IV-13 APRs for Overdraft LOC Programs 23

Table IV-14 Credit Limits of Overdraft LOC Programs 24

Table V-1 How Institutions with Two or More Overdraft Programs Determine Offerings to New Customers 26

Table V-2 Customer Qualification Rules for Automated Overdraft Programs 26

Table V-3 Whether Opt-In/Opt-Out 27

Table V-4 Information Provided to Consumers to Compare Overdraft Programs at Institutions with 

Two or More Overdraft Programs 28

Table V-5 Educational Information Provided to Consumers by Institutions with Formal Overdraft Programs 29

Table V-6 Timing of Information Provided to Consumers for Promoted Automated Programs 31

Table V-7 Timing of Information Provided to Consumers for Linked-Account and Overdraft LOC Programs 32

Table V-8 Means of Informing Consumers about Promoted Automated Programs 33

Table V-9 Means of Informing Consumers about Linked-Account and Overdraft LOC Programs 34

Table V-10 Content of Information Provided to Consumers about Promoted Automated Programs 35

Table V-11 Content of Information Provided to Consumers about Linked-Account and Overdraft 

LOC Programs 36

Table V-12 Advertising for Promoted Automated Programs 37

Table V-13 Advertising for Linked-Account and Overdraft LOC Programs 38

Table V-14 Balances Shown at ATMs for Promoted Automated Programs 39

Table V-15 Balances Shown at ATMs for Overdraft LOC Programs 40

Table V-16 Customer Notification of ATM and/or POS/Debit NSF for Automated Overdraft Programs 41

Table V-17 Customer Notification of ATM and/or POS/Debit NSF for Overdraft LOC Programs 42

Table VI-1 Overdraft Program Policies for Automated Overdraft Programs 44

Table VI-2 Compliance Review Policies for Automated Overdraft Programs 46

Table VI-3 Evaluation of Automated Overdraft Programs 47

Table VI-4 Maintenance of Consumer Information and Monitoring of Excessive Use of Overdraft Programs 48

Table VI-5 Other Monitoring of Automated Overdraft Programs 49

Table VI-6 Complaints about Automated Overdraft Programs 49

Table VII-1 Institutions’ Relationships with Vendors for Automated Overdraft Programs 51

Table VII-2 Length of Vendor Relationships for Automated Overdraft Programs 52

Table VII-3 Type of Vendor Program Used for Automated Overdraft Programs 53

Table VII-4 Vendor Compensation for Automated Overdraft Programs 54

Table VIII-1 NSF-Related Fee Income as a Share of Broader Income Measures by Quartiles 57

Table VIII-2 NSF-Related Fee Income as a Share of Broader Income Measures by Quartiles 58
FDIC Study of Bank Overdraft Pogams  n  November

Table VIII-3 NSF-Related Fee Income Ratios to Deposits Outstanding 60

Table VIII-4 NSF-Related Fee Income Ratios to Deposits Outstanding by Quartiles 61

Table VIII-5 Charged-Off and Restructured Deposit Accounts in 2006 63

Table VIII-6 Net NSF-Related Fee Income Ratios 64

Table VIII-7 Trends in NSF-Related Fee Income: 2002–2006 66

Table VIII-8 Trends in NSF-Related Fee Income Ratios by Quartiles 67

Figure VIII-1 Changes in the Ration of NSF-Related Fee Income to Net Operating Revenue 68

Figure VIII-2 Changes in the Ratio of NSF-Related Fee Income to Average Transaction Deposits 68

Table IX-1 Consumer Transaction Accounts and Deposit Dollars Held in Micro-Data Banks by Overdraft 

Program Type Offered 71

Table IX-2 Overdraft Protection Programs Offered by Micro-Data Banks 71

Table IX-3 Overdraft Program Coverage for Consumer Transaction Accounts for All Micro-Data Banks 72

Table IX-4 Type of Accounts by Neighborhood Income for Micro-Data Banks with Automated Overdraft 

Programs 72

Table IX-5 Opt-In/Opt-Out Policies of Micro-Data Banks with Automated Overdraft Programs 73

Table IX-6 Transactions Covered by Micro-Data Banks with Automated Overdraft Programs 73

Tabe IX-7 Transaction Batch-Processing Method for Micro-Data Banks with Automated 

Overdraft Programs 74

Table IX-8 Median Family Income Thresholds by Census Tract Income Bracket 74

Table IX-9 Customer Accounts by Income Group for Micro-Data Banks with Automated 

Overdraft Programs 75

Table IX-10 Account Balance by Average Dollar Amount Held and Income Group for Micro-Data 

Banks with Automated Overdraft Programs 75

Table IX-11 Customer Accounts by Number of NSF Transactions per Year and Income Group for 

Micro-Data Banks with Automated Overdraft Programs 76

Table IX-12 NSF Fees Charged by Income Group and by Number of NSF Transactions per Year 

for Micro-Data Banks with Automated Overdraft Programs 77

Table IX-13 Annual Dollar Amount of NSF Fees Charged per Consumer Account for Micro-Data 

Banks with Automated Overdraft Programs 77

Table IX-14 Customer Accounts and NSF Fees by Number of NSF Transactions per Year for Banks 

with No Automated Overdraft Program 77

Table IX-15 NSF Transactions by Income Group and Transaction Type for Micro-Data Banks with 

Automated Overdraft Programs 78

Table IX-16 NSF Transactions by Income Group and Transaction Type for Micro-Data Banks with 

Nonautomated Overdraft Programs 78

Table IX-17 Median NSF Transaction Amount by Income Group and Type of Transaction for 

Micro-Data Banks with Automated Overdraft Programs 79

Table IX-18 Customer Accounts by Age Group for Micro-Data Banks with Automated Overdraft Programs 80

Table IX-19 Customer Accounts by Number of NSF Transactions in a Year per Age Group for Micro-Data 

Banks with Automated Overdraft Programs 80

Table IX-20 NSF Transactions by Age Group and Transaction Type for Micro-Data Banks with 

Automated Overdraft Programs 80

Table IX-21 Median NSF Transaction Amount by Age Group and Type of Transaction for 

Micro-Data Banks with Automated Overdraft Programs 81

Table of Contents
FDIC S November tud 2008 y of Bank Overdraft Pogams  n  Novembe

I. Introduction

This report details the methodology and findings of the Federal Deposit Insurance Corporation’s (FDIC) 

study of overdraft programs operated by a segment of financial institutions. Over the past few years, the 

use of automated overdraft programs has risen significantly, but little empirical data have been available 

on these programs, their features, their management, the fees imposed, and consumer usage patterns.

The FDIC initiated this two-part study in 2006 to gather empirical data on the types, characteristics, and 

use of overdraft programs operated by FDIC-supervised banks. The study was undertaken as part of the 

agency’s mission to protect consumers, which it carries out by monitoring compliance with consumer 

protection laws and regulations for the banks that it supervises, educating the public about financial 

matters, and implementing programs that help promote economic inclusion. The study also reflects the 

FDIC’s responsibility to monitor the safety and soundness of banks, including the proliferation of new or 

different types of credit.

Data and information for this study were gathered through a survey of 462 randomly selected FDICsupervised institutions and a collection of customer and transaction-level data from a smaller set of the 

surveyed FDIC-supervised institutions. The survey portion of the study was designed to obtain various 

types of information related to overdraft programs, including features and characteristics, fees, processing 

policies and practices, marketing practices, disclosure, growth and revenue trends, and the role of 

vendors or other third parties in overdraft program implementation. The survey instrument can be found 

in Appendix A of this document. The micro-data collection portion was designed to gather information 

on the types of accounts and transactions that tend to generate the highest volume of overdraft fees and 

the characteristics of consumers who use automated overdraft programs. The data collection instrument 

can be found in Appendix B of this document.

The FDIC believes that objective information on these programs will help policymakers make betterinformed policy decisions and will help the public better understand the features and costs related to 

automated overdraft programs. The study results also will help the banking industry develop more effective overdraft programs to better serve consumers.

The structure of this report is based on the survey and micro-data request, and the report is in two parts. 

The first part is based on the survey instrument and contains an overview of the overdraft programs; 

overdraft fees and credit limits; customer enrollment, marketing, and disclosure practices; internal 

controls and monitoring systems; the role of vendors and third parties in overdraft practices; and the 

growth and profitability of overdraft programs. The second part of this report is based on the micro-level 

data gathered regarding consumer overdraft usage.1

II. Methodology

The results presented in this report rely on information gathered from U.S. banks through (1) a survey, 

and (2) a collection of micro-level customer and transaction-level data (micro-data). The study population included FDIC-supervised banks that were visited by examiners, most as part of scheduled on-site 

examinations, from May through December 2007.2 The surveyed institutions represent 1,171 banks 

located throughout the United States, which are defined later in Section II.1.

1 The actual survey and micro-data requests can be found in Appendices A and B, respectively. 2 As of the universe selection date, September 30, 2006, there were 5,237 FDIC-supervised banks, a number that included both 

state-chartered, nonmember commercial banks and state-chartered savings banks.
FDIC Study of Bank Overdraft Pogams  n  Novembe

II. Methodology

II.1. Overdraft Survey Methodology

The overdraft survey involved the collection of data and information on FDIC-supervised overdraft 

programs and practices through completion of a survey administered to a stratified random sample of 

FDIC-supervised institutions. The survey, attached as Appendix A, consisted of approximately 90 questions about overdraft programs and practices.

The first section of the survey instrument collected aggregate and general information on each institution’s scope of overdraft services, income earned from overdraft programs, general overdraft processing 

practices, and general disclosure practices.

The second section of the survey instrument collected detailed, program-specific data related to policies, 

monitoring practices, customer disclosure, fees, account coverage, and use of third-party vendors for the 

following types of overdraft programs or practices most commonly used by banks:

1) Automated overdraft programs: usually a computerized program by which the bank honors a 

customer’s overdraft obligations using standardized procedures or a matrix to determine whether the 

nonsufficient fund (NSF) occurrence qualifies for the overdraft coverage. “Promoted” automated 

overdraft programs are those in which the customers are informed of the existence of the overdraft 

program. “Nonpromoted” automated overdraft programs are those in which customers are not 

informed of the existence of the overdraft program.

2) Linked transfer accounts (linked-accounts): defined as a contractual agreement between a bank 

and a customer, linking the customer’s transaction account with other accounts within the bank, 

including savings and credit card accounts. In the event of an overdraft, the bank fulfills the 

customer’s obligations by transferring funds from the customer’s other accounts linked to the 

customer’s transaction account.

3) Overdraft lines of credit (LOCs): a contractual agreement between a bank and a customer stating 

that the bank will lend up to a specified amount over a defined period to cover overdraft items. 

These programs exclude LOC programs that do not specifically cover overdraft items (e.g., home 

equity LOCs). The bank initially extends the overdraft LOC after reviewing a customer’s qualifications using standard underwriting criteria; the LOC is considered a loan and requires standard 

Truth in Lending Act (Regulation Z) disclosures. After the initial decision to grant the LOC, the 

lender generally does not make a decision whether to cover individual overdrafts that fall under the 

credit limit.

4) Ad hoc overdraft: an informal program to cover customers’ overdrafts. The study also asked institutions about informal overdraft practices, if any, outside the parameters of the three formal programs 

described above.

FDIC examiners administered the questionnaire during scheduled on-site visits to reduce reporting 

burden, increase the accuracy of survey responses, and increase survey response rates. Extra steps were 

taken to ensure that the degree of accuracy for the on-site questionnaire was high, including development of standard computer programs to collect the data, specialized training of examiners to conduct the 

on-site surveys, and regular discussions to answer any questions during the survey.

The study population included (1) 1,135 institutions with less than $5 billion in assets that were 

scheduled for on-site visits by FDIC examiners between May and December 2007, and (2) 36 FDICsupervised institutions with more than $5 billion in assets regardless of whether an examination was 

scheduled. Nonretail banks, such as credit card banks and industrial loan companies, were excluded from 

the underlying study population since the focus of the survey was on retail-oriented overdraft programs 

and policies.
FDIC Study of Bank Overdraft Pogams  n  Novembe

II. Methodology

The survey was administered to a stratified random sample of 462 financial institutions from among the 

study population of 1,171 FDIC-supervised institutions.3 The strata were defined by three asset sizes 

(institutions with less than $250 million in assets; assets between $250 million and $1 billion; and assets 

greater than $1 billion). Institutions in the larger strata were sampled at higher rates to ensure that a 

substantial proportion of deposit accounts held in the study population were included. In particular, all of 

the 108 institutions in the population with more than $1 billion in assets were included in the sample. 

Also, the institutions in the “$250 million to $1 billion” stratum were sampled at more than twice the 

rate as those in the “less than $250 million” stratum. (See table below for exact sample sizes and sample 

percentages.) To derive unbiased estimates for the study population, the differential sampling rates 

applied across the size strata were taken into account.

As mentioned above, the survey sample included 36 FDIC-supervised institutions with more than 

$5 billion in assets and 72 institutions with assets between $1 billion and $5 billion scheduled to be 

examined during the data collection window. In addition, the survey sample included 354 banks 

randomly selected from among 1,063 institutions with less than $1 billion in assets. Table II-1 below 

summarizes the sample and study population and counts by strata; it also includes stratum sampling 

percentages.

Because the sample of institutions was selected from the 1,171 institutions in the study population, it is 

not a statistical sample of all 5,237 FDIC-supervised institutions. Therefore, unbiased estimates of survey 

characteristics can be made only for the 1,171 institutions in the study population. It is not possible to 

draw statistically defensible inferences from the sample data about banks outside of the underlying study 

population, including banks supervised by other agencies (such as national banks, and state-chartered 

Federal Reserve member banks or thrifts).

II.2. Micro-Level Data Methodology

The micro-data request gathered account-level information and overdraft coverage for all customer 

accounts. The micro-data also collected data on all NSF transactions processed under an institution’s 

automated overdraft program or under ad hoc overdraft coverage. (This includes items returned as 

unpaid.) The micro-data request can be found in Appendix B.

The micro-data were collected from a nonrandom subsample of the banks surveyed. As this portion of 

the study involved a nonrandom sample, it is not possible to draw statistical inferences to any broader 

population of banks using these data. Nevertheless, the FDIC believes that these data provide valuable 

information about consumer usage and fee generation related to automated overdraft programs.

3 In addition, the FDIC collected survey data from seven Puerto Rican banks. However, analysis of survey results revealed that 

the surveyed Puerto Rican banks had meaningful differences in their use of overdraft programs compared with the remainder of 

the survey population and, in fact, tended not to offer such programs. Consequently, Puerto Rican banks were not included in this 

study population.

Table II-1

Sample Summary

Asset Size Stratum Study Population Total Sample Percent Sampled

Less than $250 million 851 222 26

$250 million to $1 billion 212 132 62

$1 billion to $5 billion 72 72 100

Greater than $5 billion 36 36 100

Total 1,171 462
FDIC Study of Bank Overdraft Pogams  n  Novembe

II. Methodology

Approximately 100 banks of different sizes, locations, and overdraft programs were identified as potential 

nonrandom micro-data collection candidates. Large banks and banks whose information could more 

easily be gathered through agreements with their existing software providers were given priority in participation in the micro-level data collection.

To facilitate the data-gathering process for smaller banks, the FDIC relied on software developed by 

vendors that serviced financial institutions in the survey sample. The FDIC also used standard computer 

programs to ensure that data gathering was accurate and consistent across the study population. In addition, the FDIC conducted periodic telephone conferences with both FDIC field staff and bankers to help 

disseminate information on how to gather and submit the requested information.

The micro-data used for this study include data for 39 of the 100 banks initially identified as potential 

candidates, covering approximately 6.5 million consumer accounts and 22.6 million NSF transactions. 

Twelve months of data between January 2005 and September 2008 were collected from each of these 

banks; the data included information about account types, account category, and customer use of automated overdraft programs.
FDIC S November tud 2008 y of Bank Overdraft Pogams  n  Novembe

Part One—Overdraft Survey

III. Overview of Overdraft Programs

This section provides an overview of survey findings related to overdraft programs and the timeframe of 

program adoption, the accounts and transactions covered by these programs, and the methods by which 

institutions processed transactions. The survey was primarily focused on automated overdraft programs; 

however, to provide a basis of comparison, data were also collected for linked-account programs, overdraft LOC programs, and ad hoc practices.

All tables stratify the study population banks by asset size, where small banks are defined as those with 

less than $250 million in assets, medium banks as those with $250 million to $1 billion in assets, and 

large banks as those with more than $1 billion in assets, as of December 2006.

III.1. Programs Operated

Study population banks were asked to define all overdraft programs in operation—specifically, whether 

they had a promoted or a nonpromoted automated program, a linked-account program, or an overdraft 

LOC program—and to describe any overdraft coverage services outside of these three formal programs. 

The survey also asked the year and month in which banks adopted a specific overdraft program. The 

first year in which a bank operated a program for six months or more was considered the “start year” of 

the program.

Most study population banks (85.9 percent) operated some form of formal overdraft program, either 

automated, linked-account, or overdraft LOC (see Table III-1). Among all study population banks, 

40.5 percent operated an automated overdraft program, 62.1 percent a linked-account program, and 

50.1 percent an overdraft LOC program. Less than 15 percent of banks had no formal overdraft 

program in place, indicating that NSF transactions were processed on an ad hoc, discretionary basis. 

Table III-1

Formal Overdraft Programs Operated

Number of Study Population Banksa

Percent of Column Total By Asset Size

Did your institution operate this program 

at any point in 2006 or 2007? b

(Multiple answers allowed) All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Memo Item(s):

$1 Billion to 

$5 Billion

Greater than 

$5 Billion

Automated 474 253 138 83 53 30

40.5 29.7 65.2 76.9 73.6 83.3

Linked accounts 728 502 144 81 54 27

62.1 59.0 68.2 75.0 75.0 75.0

Overdraft LOC programs 587 368 135 84 56 28

50.1 43.2 63.6 77.8 77.8 77.8

Total study population banks 1,171 851 212 108 72 36

100.0 100.0 100.0 100.0 100.0 100.0

Memo Item(s): Number of banks with 

one or more formal overdraft program(s)

1,006 702 200 104 68 36

Percent of all study population banks 85.9 82.4 94.7 96.3 94.4 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.
FDIC Study of Bank Overdraft Pogams  n  Novembe

Part One—Overdraft Survey III. Overview of Overdraft Programs

Even among banks with formal overdraft programs, however, NSF transactions could be processed on an 

ad hoc basis.4

Large banks tended to provide a fuller menu of overdraft programs, with 50.0 percent of large banks 

operating all three formal programs (automated, linked-account, and overdraft LOC) (see Table III-2). In 

contrast, most small banks (59.9 percent) operated only one program or no formal overdraft program at all.

While the share of all study population banks with an automated overdraft program was 40.5 percent, a 

significantly greater share of large banks (76.9 percent) had an automated program, compared with 

65.2 percent of medium banks and 29.7 percent of small banks (see Table III-1). The 83 large banks that 

operated an automated overdraft program accounted for 72.6 percent of all transaction account deposit 

dollars held in the study population banks, which suggests that the majority of accounts in the study 

were held in banks with an automated program.5

As mentioned in the methodology section, automated overdraft programs can be promoted or nonpromoted. Promoted programs are actively offered to customers, while nonpromoted programs are implemented without notification to the customer. Institutions with nonpromoted automated programs are 

not subject to certain disclosure requirements under Regulation DD of the Truth in Savings Act that 

4 For instance, if an account covered by an overdraft LOC program exceeded the overdraft credit limit, the NSF transaction 

might not be processed under the formal overdraft LOC program, and the decision to pay or return the NSF transaction would be 

made on an ad hoc basis.

5 Deposit dollars for each of the surveyed institution’s checking, negotiable order of withdrawal (NOW), and money market 

demand (MMD) accounts were totaled from the 2006 Call Reports.

Table III-2

Menu of Overdraft Programs Operated

Number of Study Population Banksa

Percent of Column Total By Asset Size

Did your institution operate this combination of 

programs at any point in 2006 or 2007? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Automated, linked, and LOCs 199 81 64 54

17.0 9.5 30.3 50.0

Automated and linked 127 81 32 14

10.8 9.5 15.2 13.0

Automated and LOCs 54 15 26 13

4.6 1.8 12.1 12.0

Automated only 95 77 16 2

8.1 9.0 7.6 1.9

Linked and LOCs 204 165 30 9

17.5 19.4 14.4 8.3

Linked only 198 176 18 4

16.9 20.7 8.3 3.7

LOCs only 130 107 14 8

11.1 12.6 6.8 7.4

No formal program onlyb 165 150 11 4

14.1 17.6 5.3 3.7

Total study population banks 1,171 851 212 108

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 No formal program refers to NSF/overdraft items not processed under automated overdraft, linked-account, or overdraft LOC programs.
FDIC Study of Bank Overdraft Pogams  n  Novembe

Part One—Overdraft Survey III. Overview of Overdraft Programs

apply to institutions that promote the payment of overdrafts.6 Among study population banks with automated overdraft programs, the majority (78.9 percent) had a promoted program in place (see 

Table III-3).7

Relative to all study population institutions, 31.9 percent of the institutions had a promoted automated 

program, and 8.5 percent operated a nonpromoted program (see Figure III-1). Despite the larger proportion of study population banks with promoted automated programs, an analysis of the dollar amount 

held in transaction accounts of study population banks suggests that a greater proportion of consumer 

accounts were likely covered by nonpromoted rather than by promoted automated programs. More than 

half (51.7 percent) of the transaction account dollars held in study population banks were maintained in 

institutions with nonpromoted automated programs (see Figure III-2).8 This finding is driven by the fact 

that nonpromoted automated programs were more prevalent (63.3 percent) among the largest study 

population banks, those with more than $5 billion in assets. These 19 institutions accounted for 45.1 

percent of the transaction account dollars held in all study population banks.

6 See 12 C.F.R. 230.11. See also Final Rule, 70 Fed. Reg. 29582 (May 24, 2005). 7 Fourteen institutions had both promoted and nonpromoted automated overdraft programs, and as a result they were counted 

in the promoted category.

8 Deposit dollars for each of the surveyed institution’s checking, NOW, and MMD accounts were totaled from the 2006 Call 

Reports.

Table III-3

Promoted and Nonpromoted Automated Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

Did your institution operate a 

promoted or a nonpromoted 

automated program? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Memo Item(s):

$1 Billion to 

$5 Billion

Greater than 

$5 Billion

Promotedb 374 211 114 49 38 11

78.9 83.3 82.6 59.0 71.7 36.7

Nonpromoted only 100 42 24 34 15 19

21.1 16.6 17.4 41.0 28.3 63.3

Total with automated 474 253 138 83 53 30

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Fourteen institutions operated both a promoted automated and a nonpromoted automated program. These institutions are included only in the promoted total. 

Figure III-1

Distribution of Survey Population,

by Automated Overdraft Programs Operated

31.9%

8.5%

59.5%

Promoted automated Nonpromoted automated only No automated program

Figure III-2

Distribution of Transaction Account Dollars Held in

Study Population by Automated Programs Operated

32.3%

16.1%

51.7%

Promoted automated Nonpromoted automated only No automated program
FDIC Study of Bank Overdraft Pogams  n  Novembe

Part One—Overdraft Survey III. Overview of Overdraft Programs

Survey results show that the number of institutions in the study population providing automated overdraft programs has grown rapidly in the past several years. Most study population banks with automated 

programs (68.4 percent) initiated their program after 2001 (see Table III-4). Large banks were early 

adopters; more than half (55.4 percent) had an automated program in place by 2001, compared with 

41.9 percent of medium banks and 18.2 percent of small banks. In contrast, the majority of study population banks that operated linked accounts and overdraft LOCs already had these programs in place by 

2001 (89.4 percent and 85.9 percent, respectively).

III.2. Account and Transaction Coverage

Surveyed institutions were asked which retail customer accounts and transaction types were covered 

under each overdraft program operated, whether an account could be covered by more than one overdraft program, and the order by which applicable overdraft programs applied to the account.

The three main types of transaction accounts covered by overdraft programs are checking accounts, 

negotiable order of withdrawal (NOW) accounts, and money market demand (MMD) accounts.9 Of 

banks in the study that operated an automated program, all banks (100.0 percent) covered checking 

accounts, while the majority (74.9 percent) covered NOW accounts, and about a third (32.2 percent) 

covered MMD accounts (see Table III-5). Similarly, almost all institutions (99.3 percent) that operated 

a linked-account program covered checking accounts, while sizable majorities also covered NOW and 

MMD accounts. All institutions (100.0 percent) that operated overdraft LOC programs covered checking accounts, and many also covered NOW and MMD accounts.

Of the 584 study population banks that operated more than one overdraft program, the majority (71.8 

percent) allowed an account to be covered by more than one overdraft program (see Table III-6). Of 

these 419 banks with multiple programs that allowed multiple coverage, 261 (62.2 percent) operated an 

automated overdraft program, while the remainder had only a linked-account and an overdraft LOC 

program. For the vast majority (95.8 percent) of these 261 banks, overdraft coverage under a linked9 Although surveyed institutions were asked whether the overdraft programs covered savings accounts, these accounts were 

not included in the analysis because they are typically not the transaction accounts by which third parties are paid. Retail banking 

customers typically withdraw funds from and make payments with their checking accounts; thus, overdraft programs are most 

relevant for this type of account.

Table III-4

Banks with a Formal Overdraft Program Implemented by 2001

Number of Study Population Banksa

Percent of Column Total By Asset Size

Did your institution adopt this overdraft 

program by 2001? All

Less than 

$250 Million

$250 Million to Less 

than $1 Billion

Greater than 

$1 Billion

Automated 150 46 58 46

31.6 18.2 41.9 55.4

Total with automated 474 253 138 83

100.0 100.0 100.0 100.0

Linked accounts 650 445 132 74

89.4 88.5 91.1 91.4

Total with linked accounts 728 502 144 81

100.0 100.0 100.0 100.0

Overdraft LOC programs 504 307 120 77

85.9 83.3 89.3 91.7

Total with overdraft LOC programs 587 368 135 84

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  Novembe

Part One—Overdraft Survey III. Overview of Overdraft Programs

account or an overdraft LOC program applied to the account first, before the automated program (see 

Table III-7). In 4.2 percent of the cases, therefore, an overdraft would be covered by the automated 

program before any linked-account or overdraft LOC program applied. Further, despite invoking a 

linked-account or an overdraft LOC program first, 9.0 percent of these institutions operated all three 

programs, but invoked their automated program second rather than third.

Regarding transaction coverage, overdraft programs can cover four broad categories of transactions: 

paper checks or equivalents, automated teller machine (ATM) transactions, point-of-sale (POS)/debit 

transactions, and automated clearing house (ACH) transactions.10 The majority (80.5 percent) of institutions that operated an automated program covered all four categories (see Table III-8). Most of the study 

10 Equivalents are transactions that started off as a paper check—for example, a warrant, a teller check, or a check that a 

customer presents to a store to be scanned later. The customer expects that the payment will be processed like a regular check. 

ACH transactions include, for example, electronic bill payments and automatic debits.

Table III-5

Accounts Covered by Formal Overdraft Programs

Number of Study Population Banks

Percent of Column Total By Overdraft Programs Offered

For which of the following accounts did your 

institution offer the program? a

(Multiple answers allowed) Automated Linked-Account Overdraft LOC

Checking 474 722 587

100.0 99.3 100.0

NOW 355 595 432

74.9 81.7 73.6

MMD 153 439 212

32.2 60.3 36.2

Total with program 474 728 587

100.0 100.0 100.0

a

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

Table III-6

Account Coverage by Multiple Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

Did your institution allow an account to be 

covered by more than one overdraft program? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

No 164 107 40 17

28.2 31.5 26.3 18.9

Yes 419 234 112 73

71.8 68.5 73.7 81.1

Total that operated more than one program

584 341 152 90

100.0 100.0 100.0 100.0

Had automated 261 107 88 65

62.2 45.9 78.6 89.0

Did not have automated 159 127 24 8

37.8 54.1 21.4 11.0

Total that operated more than one program and 

allowed multiple coverage

419 234 112 73

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey III. Overview of Overdraft Programs

population banks with automated programs (81.0 percent) allowed overdrafts for ATM and POS/debit 

transactions. Similarly, more than 80.0 percent of banks with a linked-account or an overdraft LOC 

program covered all four transaction types, including ATM and POS/debit.

Table III-7

Order Overdraft Programs Invoked

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of Automated 

Program

In what order did your institution 

invoke a customer’s applicable 

overdraft programs? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion Nonpromoted Promoted

Three programs

Linked and LOC before automatedb 123 42 40 41 40 83

47.3 39.3 45.5 63.1 61.6 42.6

Linked or LOC before automatedb 24 12 8 4 1 23

9.0 10.7 9.1 6.2 1.5 11.5

Automated before linked and LOC 3 0 0 3 2 1

1.2 0.0 0.0 4.6 3.1 0.5

Two programs

Linked or LOC before automatedb 103 54 35 14 19 84

39.5 50.0 40.0 21.5 29.8 42.7

Automated before linked or LOC 8 0 5 3 3 5

3.0 0.0 5.5 4.6 4.0 2.7

Total that operated more than one 

program, allowed multiple coverage, 

and had automated

261 107 88 65 65 195

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Fourteen institutions that reported only that they invoked their linked-account then their overdraft LOC program also operated an automated overdraft program. Four institutions that reported that they 

invoked their linked-account then automated overdraft program also operated an overdraft LOC program. It is presumed that the omitted program was invoked last. 

Table III-8

Transactions Covered by Formal Overdraft Programs

Number of Study Population Banks

Percent of Column Totala By Overdraft Programs Offered

Which transactions were covered by your 

institution’s program in the event of an overdraft?

(Multiple answers allowed) Automated Linked-Account Overdraft LOC

Checks, ATM, POS/debit, and any ACH 381 601 491

80.5 82.6 83.7

ATM and POS/debit 384 603 496

81.0 82.9 84.6

Total with program 474 728 587

100.0 100.0 100.0

a

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey III. Overview of Overdraft Programs

III.3. Transaction Processing Practices

Surveyed institutions were asked how transactions were processed, including the method used to batchprocess transactions and the order in which transactions were processed if transaction types were ranked 

before payment.

In batch processing, multiple transactions are bundled into one unit and processed together at some 

point in the day. All institutions do some level of batch processing, regardless of other primary processing methods used.11 The general batch-processing methods are by check number, by presentation order, 

by size largest-to-smallest, and by size smallest-to-largest. The order in which transactions are processed 

can affect overdraft activity, since paying large transactions first could increase the number of 

overdrafts.12

While 47.2 percent of institutions batch processed transactions by size smallest-to-largest, a sizable share 

(24.7 percent) batch processed largest-to-smallest (see Table III-9). In particular, more than one-half 

(53.7 percent) of the large banks in the study batch processed transactions starting with the largest, 

compared with about a quarter (25.8 percent) of medium banks and a fifth (20.7 percent) of small banks.

Among study population institutions with an automated program, the largest share (34.5 percent) batch 

processed transactions largest-to-smallest, while 30.2 percent processed them smallest-to-largest. A 

sizable share (27.1 percent) processed by check number. In comparison, the majority (58.6 percent) of 

institutions that did not operate an automated program batch processed transactions smallest-to-largest.

Institutions also process transactions based on type. The different types of transactions processed include 

ACH, in-house ATM, system ATM, cash, POS/debit, online payments, on-us checks, and other transactions. Among study population banks, 621 (53.0 percent) processed transactions primarily by type. Of 

11 For example, even if an institution always processes checks first, before other transactions, rules need to be established for 

how a group of checks that come in at the same time are processed. 

12 For example, if a customer has an account with a $50 balance and a total of five items (one item at $100 and four items at $10) 

are presented against it, the customer will have five overdrawn items in a largest-to-smallest batch process and only one overdrawn item in a smallest-to-largest batch process.

Table III-9

Batch-Processing Methods

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Overdraft Programs 

Offered

By Type of 

Automated Program

For those items that are batch processed, which method best describes 

the order in which transactions were 

typically paid by your institution? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Has 

Automated

Linked 

and/or 

LOC Only

No 

Formal 

Program

Nonpromoted Promoted

By check number 213 134 59 19 128 79 5 12 116

18.2 15.8 28.0 17.6 27.1 14.8 3.3 12.2 31.1

By order of presentation 89 73 10 7 35 37 18 2 33

7.6 8.6 4.5 6.5 7.3 6.9 10.9 2.0 8.7

By size, largest-to-smallest 289 176 55 58 164 96 29 48 116

24.7 20.7 25.8 53.7 34.5 18.0 17.9 47.8 31.0

By size, smallest-to-largest 553 449 87 18 143 313 97 34 109

47.2 52.7 40.9 16.7 30.2 58.9 58.6 33.9 29.2

Other 27 19 2 6 4 7 15 4 0

2.3 2.3 0.8 5.6 0.8 1.4 9.3 4.0 0.0

Total study population banks 1,171 851 212 108 474 532 165 100 374

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey III. Overview of Overdraft Programs

these institutions, 60.4 percent paid cash transactions first (see Table III-10).13 POS/debit and in-house 

ATM transactions were paid first by 10.7 and 9.6 percent, respectively, of study population banks that 

processed transactions by type. Banks with no formal program (75.4 percent) were more likely to pay 

cash transactions first than banks with only a linked-account, overdraft LOC program, or both (63.0 

percent), as well as those that operated an automated program (53.7 percent). Institutions with 

promoted automated programs were more likely than those with nonpromoted programs to pay POS/

debit transactions first, while banks with nonpromoted programs were more likely than those with 

promoted programs to pay in-house ATM transactions first.

III.4. Summary

Of the study population of institutions, 85.9 percent operated a formal overdraft program, either through 

an automated program, a linked-account program, or an overdraft LOC program. Large banks tended to 

have a fuller menu of overdraft coverage services and were more likely than small and medium institutions to operate all three formal programs.

While 40.5 percent of study population operated an automated overdraft program, a greater share of 

large banks (76.9 percent) did so. The large banks that operated an automated overdraft program 

accounted for 72.6 percent of all transaction account deposit dollars held in the study population banks, 

which suggests that the majority of accounts in the study were held in banks with an automated overdraft program.14

13 Cash transactions include teller services, where cash may be demanded by an account holder and immediately provided. 14 Deposit dollars for each of the surveyed institutions’ checking, NOW, and MMD accounts were totaled from the 2006 Call 

Reports. 

Table III-10

Transactions Paid First

Number of Study Population Banksa

Percent of Column Total By Asset Size By Overdraft Programs Offered

By Type of Automated 

Program

In what order were transactions typically paid by 

your institution? All

Less than 

$250 

Million

$250 Million 

to Less than 

$1 Billion

Greater 

than $1 

Billion

Has 

Automated

Linked 

and/or 

LOC Only

No 

Formal 

Program

Nonpromoted Promoted

Cash 375 268 75 31 146 174 55 26 120

60.4 61.9 55.3 60.8 53.7 63.0 75.4 59.9 52.5

POS/debit 66 46 14 6 34 33 0 3 31

10.7 10.6 10.6 11.8 12.4 11.8 0.0 6.0 13.7

In-house ATM 60 38 14 7 44 11 5 10 34

9.6 8.8 10.6 13.7 16.1 4.1 6.6 22.2 14.9

On-us checks 40 27 11 2 15 25 0 4 12

6.5 6.2 8.2 3.9 5.7 8.9 0.0 8.3 5.2

System ATM 30 23 6 1 16 9 5 0 16

4.9 5.3 4.7 2.0 5.8 3.4 7.5 0.0 6.9

Online payments 21 15 5 1 10 11 0 0 10

3.4 3.5 3.5 2.0 3.8 3.9 0.0 0.0 4.5

Other 16 12 3 1 2 10 4 2 0

2.5 2.7 2.4 2.0 0.6 3.7 5.3 3.7 0.0

ACH 12 4 6 2 5 3 4 0 5

2.0 0.9 4.7 3.9 1.9 1.2 5.3 0.0 2.3

Total that ranked transactions for processing621 433 136 51 272 276 73 44 228

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

The majority (78.9 percent) of automated programs operated by study population banks were promoted 

programs. However, analysis of the transaction account dollars held in study population banks suggests 

that nonpromoted automated program coverage was more prevalent. Although banks that operated 

nonpromoted automated programs accounted for 8.5 percent of the study population, these banks held 

more than half (51.7 percent) of the transaction account dollars maintained in study population banks. 

It is important to note that institutions with nonpromoted automated programs are not subject to certain 

disclosure requirements.

Of institutions that operated an automated program, a significant share (68.4 percent) initiated their 

programs after 2001, with large institutions being early adopters. In contrast, the vast majority of study 

population banks with linked-accounts and overdraft LOCs (89.4 percent and 85.9 percent, respectively) 

had their programs in place by 2001.

Account and transaction overdraft coverage was similar across all types of overdraft programs. Regardless 

of the overdraft program in place, almost all banks covered checking accounts and sizable shares covered 

NOW and MMD accounts. The majority (71.8 percent) of institutions with multiple overdraft programs 

allowed an account to be covered by more than one overdraft program. Of the banks with automated 

programs that allowed overdraft coverage under multiple programs, 4.2 percent covered an overdraft by 

an automated program before any linked-account or overdraft LOC program applied. In terms of transactions covered, regardless of the overdraft program, more than 80 percent of banks covered all transaction 

types, including ATM or POS/debit transactions.

The order in which transactions are paid by a bank can affect overdraft activity, since processing a large 

transaction first could increase the number of overdrafts. While 47.2 percent of institutions batch 

processed transactions by size smallest-to-largest, a sizable share (24.7 percent) batch processed largestto-smallest. In particular, more than half (53.7 percent) of large banks batch processed transactions by 

size largest-to-smallest.

IV. Overdraft Fees and Credit Limits

This section discusses survey findings related to overdraft fees and credit limits. Specifically, the survey 

included questions about NSF-related usage fees, initiation fees, periodic maintenance fees, fees charged 

whether or not a service is used, and other related topics. Usage-related fee questions were included to 

ascertain whether these fees were assessed on a per-transaction (per-item) or daily-occurrence basis, 

whether the fees varied with the number of NSF transactions, and whether subsequent fees were assessed 

on accounts where balances remained negative. Banks operating overdraft LOCs were also asked about 

the annual percentage interest rate (APR) charged on funds advanced. In addition, the survey gathered 

information about credit limits (the maximum amount of funds that would be advanced) for automated 

overdraft programs and overdraft LOC programs. Survey findings related to fees and credit limits are 

discussed as they relate to automated overdraft programs, linked-account programs, and overdraft LOC 

programs.

IV.1. Automatic Overdraft Program Fees and Coverage Limits

Virtually all of the banks that operated automated overdraft programs (99.7 percent) charged NSFrelated usage fees (see Table IV-1). This finding did not vary with bank size. Initiation and maintenance 

fees on automated overdraft programs were much less common. Thirteen institutions in the study 

assessed an initiation fee, and seven banks charged periodic maintenance fees, in addition to usage fees; 
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

only two institutions charged all three types of fees.15 Usage fees for automated overdraft coverage were 

almost always assessed on a per-item basis (by 98.4 percent of banks having an automated program) as 

opposed to a daily-occurrence basis (see Table IV-2). This finding was true for banks in all size classes.

15 The much lower incidence of initiation and maintenance fees on fee-based programs, in part, reflects the fact that nonpromoted automated programs would not have initiation or maintenance fees. (Note that when an examiner defined a bank’s automated fee-based program as nonpromoted, questions about maintenance fees and initiation fees were not asked.) However, the 

very limited presence of these fees also indicates that they are relatively uncommon, even among study population banks operating promoted programs.

Table IV-2

Usage Fees for Automated Overdraft Programs 

Number of Study Population Banksa

Percent of Column Total By Asset Size

How are overdraft items charged by your 

institution? All

Less than 

$250 Million

$250 Million to 

Less than $1 Billion

Greater than 

$1 Billion

No fee charged 2 0 2 0

0.3 0.0 1.2 0.0

Charged per daily occurrence 4 4 0 0

0.8 2 0 0

Charged on a per-item basis 467 249 136 81

98.4 98.5 98.8 97.6

Item(s) not reported 2 0 0 2

0.4 0.0 0.0 2.4

Total with automated 474 253 138 83.0

100.0 100.0 100.0 100.0 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

Table IV-1

The Incidence of Fees Charged by Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

What types of fees are charged by your 

institution? All

Less than 

$250 Million

$250 Million to 

Less than $1 Billion

Greater than 

$1 Billion

None of the three fees 2 0 2 0

0.3 0.0 1.2 0.0

Only usage fee 455 242 132 82

96.0 95.5 95.4 98.8

Maintenance and usage fees 5 4 0 1

1.0 1.5 0.0 1.2

Initiation and usage fees 11 8 3 0

2.3 3.0 2.3 0.0

All three fees 2 0 2 0

0.3 0.0 1.2 0.0

Total with automated 474 253 138 83

100.0 100.0 100.0 100.0

Memo Item(s):

Total charging usage fee 472 253 136 83

Percent of banks with automated 99.7 100.0 98.8 100.0 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

Automated overdraft per-transaction usage fees ranged from $10 to $38, and the median fee charged was 

$27 (see Table IV-3). In this context, a $27 fee charged for a single advance of $60 that was repaid in 

two weeks roughly translated into an APR of 1,173 percent. Per-item usage fees tended to be slightly 

higher for large banks with automated overdraft programs. The average automated overdraft NSF fee for 

large banks was $30, compared with $25 for small banks. Usage fees also tended to be higher for banks 

that batch processed items starting with the largest amount (compared with banks that processed items 

starting with the smallest amount) and for banks whose programs automatically covered ATM or POS/

Table IV-3

Per-Item Fees Charged by Automated Overdraft Programs

Dollar Amountsa

Number of Study Population Banks

Percent of Banks with Program By Asset Size By Processing Method

By Transactions 

Covered

What is the highest fee 

charged by your institution to 

pay an NSF item? All

Less than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

LargesttoSmallest

Not Size 

Related

SmallesttoLargest

Does Not 

Cover 

ATM or 

POS/Debit

Covers 

ATM or 

POS/Debit

All Reporting Fee Greater than 0

Minimum 10.00 10.00 16.00 22.00 10.00 16.00 15.00 10.00 16.00

Mean 27.12 25.79 27.65 30.27 28.64 27.14 25.35 25.12 27.47

Median 27.00 25.00 28.00 30.00 29.00 27.50 25.00 25.00 27.50

Maximum 38.00 33.00 35.00 38.00 38.00 35.00 35.00 35.00 38.00

Total with automated with fee 

greater than 0

472 253 136 83 164 166 143 70 402

Percent of banks with 

automated

99.7 100.0 98.9 100.0 100.0 99.1 100.0 100.0 99.6

Does Not Use Vendor

Minimum 15.00 15.00 24.00 22.00 24.00 23.00 15.00 15.00 20.00

Mean 27.85 26.44 27.21 30.99 29.94 27.31 24.75 25.07 28.34

Median 28.00 27.00 27.00 30.00 30.00 27.50 25.00 25.00 28.00

Maximum 38.00 32.00 35.00 38.00 38.00 34.00 35.00 33.00 38.00

Total with automated and fee 

greater than 0 and does not 

use vendor

214 96 63 56 97 64 54 32 182

Percent of banks with 

automated

45.2 37.9 45.4 67.5 59.0 38.1 37.8 46.1 45.1

Uses Vendor

Minimum 10.00 10.00 16.00 23.00 10.00 16.00 20.00 10.00 16.00

Mean 26.49 25.40 28.03 28.66 26.69 27.03 25.71 25.17 26.71

Median 25.00 25.00 29.00 29.00 28.00 27.00 25.00 25.00 25.00

Maximum 35.00 33.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00

Total with automated and fee 

greater than 0 and uses vendor

257 157 74 26 66 102 89 38 219

Percent of banks with 

automated

54.2 62.1 53.5 31.3 40.4 60.9 62.2 53.9 54.3

Memo Item(s):

Total with automated 474 253 138 83 164 167 143 70 404

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 a

 Includes fee amounts for four institutions that charged fee on a per-daily-occurrence basis.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

debit transactions (compared with banks whose programs did not cover these transactions).16 Where 

charged, initiation fees on promoted automated overdraft programs ranged from $6 to $30, and annual 

maintenance fees ranged from $72 to $120 (see Table IV-4).

Most banks (89.1 percent) with automated overdraft programs reported that usage fees did not vary with 

NSF activity (see Table IV-5). Among institutions with fees that vary with NSF activity, anecdotal 

comments indicated limits on the total dollar amount of fees that a customer could incur during a specified period of time in the range of $100 to $300 per day or per statement period. Other comments indicated per-item fees that increased with NSF activity.

Approximately 25 percent of banks with automated overdraft programs indicated that subsequent fees 

were assessed on accounts that remained in negative balance status (see Table IV-5). Large banks were 

more likely to assess subsequent fees. The share of large banks assessing subsequent fees was 36.1 

percent, compared with 19.7 percent for small banks. Anecdotal survey comments indicated that such 

fees typically took the form of flat fees or interest charged on a percentage basis. Some banks reported 

having grace periods, ranging from 1 to 33 days before such subsequent fees were assessed.

Most banks (73.0 percent) with automated overdraft programs established overdraft coverage limits for 

customers in their written policies, consistent with the bank’s lending policies (see Table IV-6). 

However, large banks were more likely than small banks to specify coverage limits on automated overdraft programs in their written policies. About 83 percent of large banks established credit limits, 

compared with 65.2 percent of small banks. Automated overdraft coverage limits stipulated in written 

policies ranged from $85 to $10,000, and the median credit limit was $500. As with per-item fees, overdraft coverage limits established in policies also tended to be lower for small banks.

All institutions, regardless of the overdraft programs in place, processed some NSF transactions on an ad 

hoc basis.17 Table IV-7 compares the NSF fees charged by the 472 banks with automated overdraft 

programs that charged NSF fees to the fees charged by the 690 banks in the study population that did 

not operate automated overdraft programs but charged NSF fees.18 Fees charged to process NSF items 

tended to be somewhat higher for banks that operated automated overdraft programs, regardless of bank 

size and transaction batch-processing method.

The median amount charged by banks to pay an NSF under an automated program was $27.00 (mean of 

$27.12), as reported above, compared with $25.00 (mean of $22.90) charged by banks without automated programs for NSF items processed on an ad hoc basis. Banks without a formal overdraft program 

tended to charge the lowest NSF fees. The median NSF fee for banks that did not operate a formal 

program was $20.00 (mean of $20.84).

16 Multivariate regressions examining which factors were systematically related to the usage fees on automated overdraft 

programs indicated that fees were higher for banks in larger asset-size classes, banks whose programs covered ATM or POS/

debit transactions, and banks that batch processed transactions from largest to smallest. Usage fees tended to be lower for banks 

that did not also offer an overdraft LOC program. Given these factors, vendor use and whether the bank operated a promoted or a 

nonpromoted program were not systematically related to usage fees on automated overdraft programs reported for study population banks.

17 For instance, if an account covered by an overdraft LOC program exceeded the overdraft credit limit, the NSF transaction 

might not be processed under the formal overdraft LOC program, and the decision to pay or return the NSF transaction would be 

made on an ad hoc basis. For almost all institutions in the survey population that operated automated overdraft programs, fees 

charged for processing NSF items that were not covered by a formal overdraft program were equal to the per-item fee charged 

under the automated program. 

18 For most of the survey population operating automated programs, the per-item fee charged when items were paid under automated overdraft programs was the same as the fee charged by the bank on NSF items that it did not pay. These two fees were 

equal to each other for 98.1 percent of 451 institutions reporting the two fee items.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

Table IV-4

Initiation and Maintenance Fees for Automated Overdraft Programs 

Dollar Amounts

Number of Study Population Banks

Percent of Banks with Program

By Asset Size

Less than 

$250 Million

$250 Million to 

Less than $1 

Billion

Greater than 

All $1 Billion

What is the initiation fee associated with the program? 

Minimum 6.00 27.00 6.00 NA

Mean 25.69 28.00 22.00 NA

Median 29.00 28.00 30.00 NA

Maximum 30.00 29.00 30.00 NA

Total with automated with fee greater than 0 12 8 5 NA

Percent of banks with automated 2.6 3.0 3.5 NA

What is the annual maintenance fee to maintain the program? 

Minimum 72.00 96.00 72.00 120.00

Mean 93.75 96.00 72.00 120.00

Median 96.00 96.00 72.00 120.00

Maximum 120.00 96.00 72.00 120.00

Total with automated with fee greater than 0 6 4 2 1

Percent of banks with automated 1.4 1.5 1.2 1.2

Memo Item(s):

Total with automated 474 253 138 83

100.0 100.0 100.0 100.0

Note: NA = not applicable.

Table IV-5

Features of Usage-Related Fees for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total

By Asset Size

Less than 

$250 Million

$250 Million to 

Less than $1 

Billion

Greater than 

All $1 Billion

Does the per item/occurrence fee change with the number of items/occurrences with insufficient funds?

No 423 234 120 69

89.1 92.4 87.2 83.1

Yes 52 19 18 14

10.9 7.6 12.8 16.9

Total with automated 474 253 138 83

100.0 100.0 100.0 100.0

Once an account is overdrawn, are additional fees or interest assessed subsequent to regular per item/per occurrence fees for 

being in overdraft status?

No 357 203 101 53

75.4 80.3 73.3 63.9

Yes 117 50 37 30

24.6 19.7 26.7 36.1

Total with automated 474 253 138 83

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

Table IV-7

NSF Fees Charged by Study Population Banks

Dollar Amounta

Number of Study Population 

Banks By Asset Size By Overdraft Programs Offered By Batch Processing Mode

What is the highest 

fee charged to PAY 

an NSF item? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Has Nonpromoted 

Automated 

Overdraft 

Program

Has 

Promoted 

Automated 

Overdraft 

Program

Has Linked 

and/or LOC 

Program(s)

No 

Formal 

Program

LargesttoSmallest

Not Size 

Related

SmallesttoLargest

No automated overdraft program 

Minimum 7.50 7.50 15.00 15.00 NA NA 7.50 9.00 15.00 7.50 10.00

Mean 22.90 22.26 26.80 27.10 NA NA 23.54 20.84 25.45 23.70 21.81

Median 25.00 24.00 27.75 25.00 NA NA 25.00 20.00 25.00 25.00 20.00

Maximum 50.00 35.00 37.50 50.00 NA NA 50.00 32.00 37.00 50.00 35.00

Total with fee 

greater than 0

690 594 71 25 NA NA 525 165 125 156 408

Automated overdraft program 

Minimum 10.00 10.00 16.00 22.00 15.00 10.00 NA NA 10.00 16.00 15.00

Mean 27.12 25.79 27.65 30.27 28.17 26.83 NA NA 28.64 27.14 25.35

Median 27.00 25.00 28.00 30.00 30.00 27.00 NA NA 29.00 27.50 25.00

Maximum 38.00 33.00 35.00 38.00 38.00 36.00 NA NA 38.00 35.00 35.00

Total with fee 

greater than 0

472 253 136 83 100 372 NA NA 164 166 143

a

 For banks that do not operate an automated overdraft program, this is the NSF fee reported by the bank for processing NSF items not covered under another formal program.

Note: NA = not applicable.

Table IV-6

Credit Limits of Automated Overdraft Programs

Dollar Amount

Number of Study Population Banks

Percent of Banks with Program By Asset Size

If your institution has adopted written policies and specified a 

cap on advances, what is the dollar limit? All

Less than 

$250 Million

$250 Million to 

Less than $1 

Billion

Greater than 

$1 Billion

Minimum 85 100 85 300

Mean 783.7 653.5 801.2 1,066.1

Median 500 500 700 750

Maximum 10,000 1,700 3,000 10,000

Total with automated reporting limit 346 165 112 69

Percent of banks with automated 73.0 65.2 81.4 83.1

Memo Items(s):

Number of banks with automated 474 253 138 83

100.0 100.0 100.0 100.0

Banks with no written policy 81 61 14 5

17.0 24.2 10.5 6.0

Banks having written policy but no limit specified 47 27 11 9

9.9 10.6 8.1 10.8
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

IV.2. Fees on Linked-Account Programs

Linked-account programs allow customers to link other accounts at the same institution to their transaction account, which permits them to use funds in another account to cover NSF transactions. Almost 

half (48.9 percent) of the 728 banks operating linked-account programs did not charge initiation, maintenance, or usage-related transfer fees for this type of service (see Table IV-8). Small banks were less 

likely than other banks to charge any of these fees for linked-account services, as were banks that did not 

operate an automated overdraft program or those that batch-processed items starting with the smallest 

item.19 Less than 4.0 percent of banks with linked-account programs charged initiation fees, and where 

such fees were charged, they ranged from $1 to $30 (see Table IV-9). Slightly more than 1 percent of 

banks reported charging periodic maintenance fees for linked-account services. Where assessed, such fees 

ranged from $12 to $36 annually.

The most common fee associated with linked-account overdraft programs for banks in the study population was a usage-related funds transfer fee (see Table IV-9). Of the 728 institutions operating linkedaccount programs, almost half (49.2 percent) reported imposing a transfer fee at the time an NSF 

occurred. Small banks were less likely than other banks to charge a transfer fee. Transfer fees on linkedaccount programs ranged from $1 to $25, and the median transfer fee was $5.

19 Multivariate regressions examining the likelihood that a bank charged any fee on its linked- account program indicated that 

banks that were small, batch processed transactions starting with the smallest item, did not have an automated program, and did 

not automatically cover ATM or POS/debit transactions were all associated with a lower likelihood of charging linked-account fees.

Table IV-8

The Incidence of Fees Charged by Linked-Account Overdraft Programs

Number of Study 

Population Banksa

Percent of Column Total By Asset Size

By Presence of 

Automated Overdraft 

Program By Processing Method

By Transactions 

Covered

What types of fees 

are charged by 

your institution? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Has 

Automated 

Overdraft 

Program

No 

Automated 

Overdraft 

Program

LargesttoSmallest

Not 

Size 

Related

SmallesttoLargest

Does Not 

Cover ATM 

or POS/

Debit

Covers 

ATM or 

POS/Debit

None of the three 

fees

356 276 61 19 122 234 70 81 205 52 304

48.9 55.0 42.2 23.5 37.4 58.3 37.4 40.7 60.1 58.5 47.6

Only initiation fee 7 4 3 0 2 5 0 2 5 0 7

1.0 0.8 2.2 0.0 0.5 1.4 0.0 0.8 1.6 0.0 1.1

Only maintenance 6 0 2 4 6 0 4 0 2 0 6

0.8 0.0 1.1 4.9 1.7 0.0 2.1 0.0 0.5 0.0 0.9

Only transfer fee 335 207 75 53 182 154 103 114 119 37 299

46.1 41.2 52.2 65.4 55.9 38.2 54.8 57.2 34.8 41.5 46.7

Maintenance and 

transfer fees

2 0 0 2 1 1 1 0 1 0 2

0.3 0.0 0.0 2.5 0.3 0.3 0.5 0.0 0.3 0.0 0.3

Initiation and 

transfer fees

19 15 3 0 11 8 8 2 9 0 19

2.5 3.1 2.2 0.0 3.3 1.9 4.1 0.8 2.7 0.0 2.9

All three fees 1 0 0 1 1 0 1 0 0 0 1

0.1 0.0 0.0 1.2 0.3 0.0 0.5 0.0 0.0 0.0 0.2

Item(s) not reported 2 0 0 2 2 0 1 1 0 0 2

0.3 0.0 0.0 2.5 0.6 0.0 0.5 0.5 0.0 0.0 0.3

Total with linked 

accounts

728 502 144 81 325 402 188 199 341 88 639

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

The majority (58.8 percent) of the 352 banks that reported charging usage fees for transfers to cover 

NSF activity in linked accounts assessed the fees on a per-daily occurrence basis rather than a per-item 

basis (see Table IV-10). Only 6.2 percent of banks operating linked-account programs indicated that 

usage fees varied with the number of NSF transactions.20 Survey comments indicated that some banks 

charged a fee for transfers above a preset number. Other banks reported a general policy of capping the 

total NSF-related usage fees that a customer could incur.

20 All banks offering the program were asked if the usage fee varied with NSF activity, including banks reporting a transfer fee 

equal to zero, since banks could have a fee schedule that charged no transfer fee below some threshold level of NSF activity.

Table IV-9

Fees for Linked-Account Overdraft Programs 

Dollar Amounts

Number of Study Population Banks

Percent of Banks with Program By Asset Size

All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

What is the initiation fee associated with the program? 

Minimum 1.00 1.00 3.00 12.00

Mean 8.98 7.40 13.25 12.00

Median 5.00 5.00 10.00 12.00

Maximum 30.00 25.00 30.00 12.00

Total with linked accounts with fee greater than 0 27 19 6 1

Percent of banks with linked accounts 3.7 3.8 4.4 1.2

What is the maintenance fee to maintain the program? 

Minimum 12.00 NA 16.00 12.00

Mean 26.58 NA 16.00 29.00

Median 35.00 NA 16.00 36.00

Maximum 36.00 NA 16.00 36.00

Total with linked accounts with fee greater than 0 9 NA 2 7

Percent of banks with linked accounts 1.2 NA 1.1 8.6

For the institution’s linked accounts and lines of credit programs, what is the fee to transfer or advance funds?

Minimum 1.00 1.00 1.00 1.00

Mean 5.17 4.89 4.73 6.86

Median 5.00 5.00 5.00 5.00

Maximum 25.00 25.00 15.00 25.00

Total with linked accounts with fee greater than 0 358 222 79 57

Percent of banks with linked accounts 49.2 44.3 54.5 70.4

Memo Item(s):

Total with linked accounts 728 502 144 81

100.0 100.0 100.0 100.0

Note: NA = not applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

IV.3. Fees, APRs, and Credit Limits on Overdraft LOCs

This section examines the fees, interest rates, and credit limits on overdraft LOCs operated by 587 of the 

banks in the study population. As discussed earlier, overdraft LOCs are credit facilities that advance 

funds to cover NSF activity for a contractual APR.

More than half (59.2 percent) of banks with overdraft LOCs did not charge initiation, maintenance, or 

usage fees for the service (see Table IV-11). For these institutions, the cost of overdraft coverage was the 

interest charged on actual funds advanced. Small banks were somewhat less likely than large banks to 

charge any of the three noninterest fees, as were banks that did not also operate an automated overdraft 

program and banks whose LOC program did not automatically cover ATM or POS/debit transactions. 

The share of small banks that reported charging at least one noninterest fee on their overdraft LOC 

program was 36.5 percent, compared with 51.2 percent of large banks.

A small minority (10.3 percent) of banks with overdraft LOCs charged an initiation fee to establish the 

program for a customer. Where charged, initiation fees ranged from $5 to $200. Among banks charging 

these fees, the median initiation fee was $25 (mean of $30.32) (see Table IV-12). Maintenance fees were 

the most common noninterest fee associated with overdraft LOCs. Almost 29 percent of the 587 banks 

in the study population with overdraft LOCs charged periodic maintenance fees.21 Maintenance fees 

charged for overdraft LOCs ranged from $10 to $200 dollars, as measured on an annual basis. 

21 Several institutions indicated that customers were offered a choice between a maintenance fee and a usage fee on their 

overdraft LOC. Because the responses for these banks contained both a nonzero maintenance fee and a nonzero usage fee, they 

were counted as charging both fees in the cross-tabulations on noninterest fees charged. 

Table IV-10

Features of Linked-Account Transfer Fees

Number of Study Population Banksa

Percent of Column Total By Asset Size

All

Less than $250 

Million

$250 Million to 

Less than $1 

Billion

Greater than 

$1 Billion

How are overdraft items charged?

No transfer fee 369 280 66 23

50.7 55.7 45.6 28.4

Charged per daily occurrence 207 130 48 29

28.5 26.0 33.3 35.8

Charged on a per-item basis 145 92 27 26

20.0 18.3 18.9 32.1

Item(s) not reported 6 0 3 3

0.9 0.0 2.2 3.7

Total with linked accounts 728 502 144 81

100.0 100.0 100.0 100.0

Does the per item/occurrence fee change with the number of 

items/occurrences with insufficient funds?

No 682 464 140 79

93.8 92.4 96.7 97.5

Yes 45 38 5 2

6.2 7.6 3.3 2.5

Total with linked accounts 728 502 144 81

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

Among banks that assessed this type of fee, the median annualized maintenance fee was $25 (mean of 

$26.41). Small institutions were less likely to charge maintenance fees on overdraft LOCs than large 

institutions, but small institutions were more likely to charge initiation fees (see Table IV-11). Both 

initiation and maintenance fees were assessed, regardless of a customer’s actual overdraft activity.

Almost 15 percent of banks that operated overdraft LOCs assessed a usage fee when funds were 

advanced, in addition to charging interest on the credit extended. Usage-related noninterest fees ranged 

from $1 to $25 and were more likely to be assessed on a daily occurrence basis (44 institutions) than on a 

per-item basis (25 institutions) (data not reported in tables).22 Where charged, the median noninterest 

usage fee for overdraft LOCs was $5 (mean of $6.65). Large banks tended to have somewhat higher 

usage fees (see Table IV-12).

The annual percentage interest rate reported by banks for overdraft LOC usage ranged from 6.0 percent 

to 21.0 percent per year. The median APR on overdraft LOCs reported by the study population was 18.0 

percent (mean of 16.4 percent) (see Table IV-13). There was little variation in APRs on overdraft LOCs 

across bank asset-size groups.23

22 Information on how usage-related noninterest advance fees on overdraft LOCs were charged was missing for the remaining 

18 banks that reported positive fees. 

23 Multivariate regressions including categorical variables classifying banks in terms of size, other programs offered, batchprocessing mode, and whether the overdraft LOC program covered ATM or POS/debit transactions as explanatory variables indicated that only transactions covered by the overdraft LOC program were systematically related to the APR of the program. 

Specifically, banks having overdraft LOC programs that did not automatically cover ATM or POS/debit transactions had lower 

APRs on credit extended under these programs, controlling for the other factors.

Table IV-11

The Incidence of Noninterest Fees Charged by Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Presence 

of Automated 

Overdraft Program

By Transactions 

Covered

What types of fees are charged by 

your institution? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Has 

Automated 

Overdraft 

Program

No 

Automated 

Overdraft 

Program

Does Not 

Cover ATM 

or POS/

Debit

Covers 

ATM or 

POS/Debit

None of the three fees 348 234 74 40 121 227 46 302

59.2 63.5 54.8 47.6 47.7 68 72.7 57.6

Only initiation fee 5 4 2 0 2 4 0 5

0.9 1.0 1.2 0.0 0.6 1.2 0.0 1.0

Only maintenance 106 61 22 22 62 44 2 104

18.0 16.7 16.7 26.2 24.4 13.2 3.2 19.8

Only usage fee 56 23 21 12 34 22 10 46

9.5 6.3 15.5 14.3 13.6 6.4 16.4 8.7

Maintenance and usage fees 16 8 3 5 15 1 2 14

2.7 2.1 2.4 6.0 5.9 0.3 2.6 2.7

Initiation and usage fees 8 8 0 0 0 8 0 8

1.3 2.1 0.0 0.0 0.0 2.3 0.0 1.5

Maintenance and initiation fees 40 27 10 4 15 25 3 37

6.9 7.3 7.1 4.8 6.1 7.5 5.1 7.1

All three fees 7 4 3 0 3 4 0 7

1.2 1.0 2.4 0.0 1.3 1.2 0.0 1.3

Item(s) not reported 1 0 0 1 1 0 0 1

0.2 0.0 0.0 1.2 0.4 0.0 0.0 0.2

Total with overdraft LOC programs 587 368 135 84 253 334 63 524

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

Table IV-12

Noninterest Fees Charged by Overdraft LOC Programs

Dollar Amounts

Number of Study Population Banks

Percent of Banks with Program By Asset Size

All

Less than $250 

Million

$250 Million to 

Less than $1 

Billion

Greater than 

$1 Billion

What is the initiation fee associated with the program? 

Minimum 5.00 5.00 12.00 10.00

Mean 30.32 23.18 50.56 32.50

Median 25.00 25.00 25.00 30.00

Maximum 200.00 50.00 200.00 60.00

Total with LOC with fee greater than 0 61 42 14 4

Percent of banks with overdraft LOC programs 10.3 11.5 10.7 4.8

What is the maintenance fee to maintain the program? (annual basis) 

Minimum 10.00 12.00 12.00 10.00

Mean 26.41 23.35 33.38 27.61

Median 25.00 25.00 25.00 25.00

Maximum 200.00 50.00 200.00 100.00

Total with LOC with fee greater than 0 169 100 38 31

Percent of banks with overdraft LOC programs 28.8 27.1 28.6 36.9

For the institution’s linked accounts and lines of credit programs, what is the fee to transfer or advance funds?

Minimum 1.00 1.00 1.00 2.00

Mean 6.65 6.04 5.79 9.39

Median 5.00 5.00 5.00 5.50

Maximum 25.00 10.00 25.00 25.00

Total with LOC with fee greater than 0 87 42 27 18

Percent of banks with overdraft LOC programs 14.9 11.5 20.2 21.4

Memo Item(s):

Total with overdraft LOC programs 587 368 135 84

100.0 100.0 100.0 100.0

Table IV-13

APRs for Overdraft LOC Programs

Dollar Amounts

Number of Study Population Banks

Percent of Banks with Program By Asset Size

For the institution’s lines of credit program, what is the typical 

APR on the outstanding balance? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Minimum 6.00 8.00 6.00 6.00

Mean 16.38 16.41 16.46 16.09

Median 18.00 18.00 18.00 17.99

Maximum 21.00 21.00 21.00 21.00

Total reporting APRs 572 357 133 82

Percent of banks with overdraft LOC programs 97.4 96.9 98.8 97.6

Memo Item(s):

Total with overdraft LOC programs 587 368 135 84

100.0 100.0 100.0 100.0
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey IV. Overdraft Fees and Credit Limits

Only about one-third of banks operating overdraft LOCs reported credit limits in their written policies.24 Small banks were less likely to have limits specified in written policies than large banks (see 

Table IV-14). Where specified, overdraft LOC credit limits ranged from $300 to $100,000, with a 

median limit of $5,000. Small banks had a somewhat lower median credit limit on overdraft LOC 

programs ($4,000) than large banks ($5,000).

IV.4. Summary

For almost all study population banks operating an automated overdraft program, the main fee associated 

with the program was an NSF usage fee. Usage fees reported by these banks ranged from $10 to $38; the 

median fee was $27, charged on a per-transaction basis in almost all cases. In this context, a $27 fee 

charged for a single advance of $60 that was repaid in two weeks roughly translated into an APR of 

1,173 percent. Many surveyed banks (24.6 percent) assessed additional fees on accounts that remained 

in negative balance status in the form of flat fees or interest charged on a percentage basis.

Fees assessed for linked-account and overdraft LOC programs were generally lower than for automated 

overdraft programs. Almost half of the study population banks with linked-account programs did not 

charge explicit fees for the service. The most common fee associated with linked-account programs was 

a transfer fee; where charged, the median fee was $5. The primary cost associated with overdraft LOCs 

was the interest charged on funds advanced, usually accruing at an APR of around 18 percent.

Most banks in the study population that operated automated overdraft programs (73 percent) established coverage limits for customers in written policies, consistent with a bank’s lending program. Maximum automated overdraft coverage limits stipulated in these policies ranged from $85 to $10,000, and 

the median credit limit was $500. In contrast, among banks with written policies establishing credit 

limits on overdraft LOCs, the median limit was $5,000.

24 Compared with large banks, small banks were less likely to have written policies. Small banks were also less likely to specify 

credit limits for overdraft LOCs.

Table IV-14

Credit Limits of Overdraft LOC Programs

Dollar Amounts

Number of Study Population Banks 

Percent of Banks with Program By Asset Size

If your institution has adopted written policies and specified a 

cap on advances, what is the dollar limit? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Minimum 300.00 300.00 500.00 500.00

Mean 8,211.11 5,203.85 9,484.38 13,662.77

Median 5,000.00 4,000.00 5,000.00 5,000.00

Maximum 100,000.00 25,000.00 100,000.00 100,000.00

Total with overdraft LOC programs with written limitsa 194 100 51 43

Percent of banks with program 33.1 27.1 38.1 51.2

Memo Item(s):

Total with overdraft LOC programs 587 368 135 84

100.0 100.0 100.0 100.0

a

 Summary statistics reflect data for banks with written policies, where the policies stipulate a written limit.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

V. Customer Enrollment, Marketing, and 

Disclosure Practices

Institutions were asked a wide range of questions regarding how customers are enrolled in overdraft 

programs and how the overdraft programs and practices are marketed and disclosed to consumers.25

This section discusses how banks determine which overdraft program to offer new customers, whether 

customers were given the opportunity to opt in or opt out of the program, how and what comparative 

and educational information was provided, and when and how customers were informed of various overdraft programs and features. In addition, this section discusses whether account and coverage limits for 

overdraft programs were displayed at ATMs, and when customers were notified of insufficient funds 

available at ATMs and POS/debit terminals.

Regarding automated overdraft programs, a number of questions in this section did not apply to nonpromoted automated programs; by definition, nonpromoted programs are not offered or advertised to 

customers. As previously reported in Section II, 8.5 percent of study population banks operating nonpromoted automated programs held more than half (51.7 percent) of the transaction account dollars maintained in study population banks. Therefore, some of the marketing and survey disclosure results 

presented in this section may not apply to a significant number of customers covered by nonpromoted 

automated programs. Questions regarding opt-in and opt-out features of an overdraft program, comparative and educational information, and the notification of NSFs at ATMs and POS/debit terminals 

applied to both promoted and nonpromoted automated programs.

V.1. Offering Overdraft Programs to New Customers

Surveyed institutions were asked about the methods used to determine which overdraft programs to offer 

new customers. This question was most relevant to 584 study population banks that operated more than 

one type of overdraft program, and therefore had to decide which or how many programs to offer. Of 

those institutions, 45.5 percent reported offering all programs available, and 19.3 percent offered only 

promoted automated programs unless the customer specifically requested alternative overdraft options 

(see Table V-1). Almost one-third (31.7 percent) of institutions that operated more than one type of 

overdraft program had some “other” way of determining which program to offer. Some of the institutions 

that responded that they used “other” methods noted only offering an overdraft program upon a customer’s request, offering different programs depending on the type of account, or giving bank employees 

discretion as to program choice.

Institutions were asked what rules and procedures were used to determine whether a customer qualified 

for a program, including whether customers were subjected to credit checks or were required to have a 

minimum balance in their account. Banks were also asked if account age or the customer’s history with 

the institution, recurring deposit activity, or some other qualification criteria were used to determine if a 

customer was eligible for an overdraft program.

As Table V-2 shows, among study population institutions with automated overdraft programs, the most 

common rules used to determine if a customer qualified for an overdraft program were the age of the 

customer’s account (71.6 percent) and the customer’s history with the institution (60.1 percent). These 

results were consistent across asset-size groups. In the case of study population banks with linked-account 

programs, the most common response was to use “other” qualification criteria; the majority of those institutions clarified that there were no special qualification criteria for a customer to establish a linked 

25 The discussion in Sections V though VII of this study focus on overdraft services through automated programs, linked 

accounts, and LOCs. 
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Table V-1

How Institutions with Two or More Overdraft Programs Determine Offerings to New Customers

Number of Study Population Banksa

Percent of Column Total By Asset Size

How did your institution determine which overdraft program to 

offer new customers? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Offers all programs available 266 169 61 36

45.5 49.4 40.0 40.0

Offers only promoted automated program unless customer 

requests other options

113 50 40 23

19.3 14.6 26.3 25.6

Uses software to determine which customers are offered 

programs

12 0 6 6

2.1 0.0 4.2 6.7

Other 185 115 45 25

31.7 33.7 29.5 27.8

Item(s) not reported 8 8 0 0

1.4 2.3 0.0 0.0

Total with two or more overdraft programsb 584 342 152 90

100.0 100.0 100.0 100.0

Memo Item(s): Number of banks with one or no overdraft 

program

587 510 59 18

Percent of study population banks 50.1 59.9 28.0 16.7

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Banks with two or more overdraft programs are those that operate at least two of the following: promoted automated overdraft programs, nonpromoted automated overdraft programs, linked account 

programs, or overdraft LOC programs.

Table V-2

Customer Qualification Rules for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

All Banks with Linked 

Accounts or LOC Programs

Which rules were used by your 

institution to determine if customer 

qualifies for program? 

b

(Multiple answers allowed) All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

All Linked 

Accounts All LOCs

Credit check 77 46 19 12 78 538

16.3 18.2 14.0 14.5 10.7 91.7

Minimum balance 157 96 34 27 117 84

33.0 37.9 24.4 32.5 16.1 14.3

Age of account 339 176 101 62 126 171

71.6 69.7 73.3 74.7 17.4 29.2

History with bank 285 146 83 56 198 302

60.1 57.6 60.5 67.5 27.3 51.5

Recurring deposit 121 65 30 25 41 81

25.5 25.8 22.1 30.1 5.7 13.9

Other 164 88 48 28 380 88

34.7 34.8 34.9 33.7 52.2 15.0

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers which apply are included.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

account, apart from having two or more accounts with the institution. The dominant qualification 

criteria for overdraft LOC programs, which commonly require underwriting, was a positive credit check 

result (91.7 percent).

V.2. Enrollment in Overdraft Programs

Surveyed banks were asked whether the automated overdraft program or linked-account policies 

required customers to affirmatively enroll in the program (opt in) to participate, allowed customers who 

were automatically enrolled to request removal from the program (opt out), or followed some other 

policy. As shown in Table V-3, most study population banks with automated programs (75.1 percent) 

featured opt-out programs, while 11.1 percent featured opt-in programs. A portion of banks that 

responded that they followed some other policy (26 of the 65 banks) commented that customers were 

not given the choice to opt in or out of the automated program. There were no significant patterns 

across size groups for these results.

Study population institutions with promoted automated programs were far more likely (83.3 percent) 

than institutions with nonpromoted programs (44.6 percent) to follow an opt-out policy. Bank comments 

indicated that study population banks with nonpromoted automated programs were much more likely 

than those with promoted programs to not give customers the option to opt in or out of the automated 

overdraft program. In contrast, the large majority of banks with linked-account programs (94.7 percent) 

followed an opt-in policy (see Table V-3).

V.3. Providing Comparative and Educational Information to Consumers

Surveyed institutions were asked whether and how consumers were provided comparative information 

about the features and costs of alternative types of overdraft programs, as well as educational information to help the customer use overdraft coverage wisely and efficiently. The survey did not collect information on the quality or effectiveness of information and disclosures provided to customers.

Table V-3

Whether Opt-In/Opt-Out

Number of Study Population Banksa

Percent of Column Total

Did customers opt-in or opt-out of you

institution’s program, or was the option not 

available?

All Automated 

Overdraft Program

Promoted 

Automated

Nonpromoted 

Automated

All Linked 

Accounts

Opt-in 53 53 NA 689

11.1 14.1 0.0 94.7

Opt-out 356 311 45 17

75.1 83.3 44.6 2.4

Otherb 65 10 56 21

13.7 2.6 55.4 2.9

Total with program 474 374 100 728

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Of the 65 institutions that reported “Other,” 26 described in comments that neither the opt-in nor opt-out option was available. 

Note: NA = not applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

On average, 63.1 percent of institutions with more than one type of overdraft program provided comparative information about program features and costs to consumers (see Table V-4). Less than one-third of 

the institutions (28.8 percent) with at least one type of formal overdraft program reported providing 

educational information (see Table V-5).

Table V-4

Information Provided to Consumers to Compare Overdraft Programs 

at Institutions with Two or More Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Overdraft Programs 

Offered

Did your institution provide 

comparative information? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Automated 

and Other 

Programs

Linked and 

LOC Only

No 215 127 61 28 142 73

36.9 37.1 40.0 31.1 37.5 35.9

Yes 368 215 91 62 237 131

63.1 62.9 60.0 68.9 62.5 64.1

Total with two or more programsc 584 341 152 90 379 204

100.0 100.0 100.0 100.0 100.0 100.0

If yes, all types of information that applyb (Multiple answers allowed)

Deposit account agreement 137 73 30 34 95 43

37.3 33.9 33.3 54.8 39.9 32.6

Brochure about accounts 207 111 56 40 153 55

56.3 51.8 61.4 64.5 64.3 41.8

Information provided by bank 

personnel

282 157 77 48 185 97

76.7 73.2 84.2 77.4 78.0 74.1

Information provided only when 

asked

46 38 5 3 22 25

12.5 17.9 5.3 4.8 9.1 18.8

Other 38 4 18 17 34 5

10.5 1.8 19.3 27.4 14.2 3.7

Total with two or more programs that 

provide information

368 215 91 62 237 131

100.0 100.0 100.0 100.0 100.0 100.0

If yes, all information combinations

Only source of information is written 

materials

21 12 3 6 15 5

5.6 5.4 3.5 9.7 6.4 4.2

Only source of information is bank 

personnel

77 50 16 11 39 38

20.9 23.2 17.5 17.7 16.4 29.1

Other 5 0 3 2 5 0

1.4 0.0 3.5 3.2 2.2 0.0

Multiple sources of information 

provided

219 115 64 40 156 63

59.5 53.6 70.2 64.5 65.9 48.0

Information provided only when 

asked

46 38 5 3 22 25

12.5 17.9 5.3 4.8 9.1 18.8

Total with two or more programs that 

provide information

368 215 91 62 237 131

100.0 100.0 100.0 100.0 100.0 100.0 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

c

 Banks with two or more overdraft programs are those that operate at least two of the following: promoted automated overdraft programs, nonpromoted automated overdraft programs, linked account 

programs, or overdraft LOC programs.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Table V-5

Educational Information Provided to Consumers by Institutions with Formal Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Overdraft 

Programs 

Offered

By Type of 

Automated Program

By Transactions 

Covered

Did your institution provide 

educational information? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Offers 

Automated

Linked 

and/or 

LOC 

Only

Nonpromoted Promoted

Does Not 

Cover 

ATM or 

POS/

Debit

Covers 

ATM or 

POS/

Debit

No 716 537 119 61 256 461 69 186 92 625

71.2 76.5 59.2 58.7 53.9 86.6 69.2 49.9 78.1 70.3

Yes 290 165 82 43 218 71 31 187 26 264

28.8 23.5 40.8 41.3 46.1 13.4 30.8 50.1 21.9 29.7

Total with formal overdraft 

program(s)c

1,006 702 200 104 474 532 100 374 118 889

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s): Number of banks 

that have no formal program

165 150 11 4 0 0 0 0 52 113

Percent of study population banks 14.1 17.6 5.3 3.7 0.0 0.0 0.0 0.0 30.8 11.2

If yes, all types of information that apply b (Multiple answers allowed)

Comparison chart 32 15 10 7 32 0 6 26 5 27

11.0 9.3 11.8 16.3 14.6 0.0 19.4 13.9 21.1 10.1

Fee sheets 154 88 43 23 100 54 17 83 20 135

53.3 53.5 52.9 53.5 45.8 76.3 55.1 44.3 77.3 51.0

Examples of costs 50 27 16 7 38 7 2 36 5 45

17.2 16.3 19.6 16.3 17.6 9.9 6.5 19.4 18.8 17.1

Overdraft protection brochure 149 81 48 20 134 15 10 124 9 140

51.3 48.8 58.8 46.5 61.2 21.1 31.3 66.1 35.1 52.9

Other 117 61 32 24 92 26 5 27 1 116

40.5 37.2 39.2 55.8 42.1 35.9 17.6 14.2 3.9 44.1

Total with formal overdraft 

program(s) that provide educational information

290 165 82 43 218 71 31 187 26 264

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

If yes, all information combinations

Only fee sheets 43 31 8 4 11 32 4 7 12 31

14.7 18.6 9.8 9.3 5.1 44.4 13.6 3.6 46.1 11.7

Only brochure 58 35 18 6 57 2 8 49 5 53

20.1 20.9 21.6 14.0 25.9 2.2 24.8 26.1 18.8 20.2

Other 55 31 14 10 44 12 6 37 1 54

19.0 18.6 17.6 23.3 20.0 16.1 20.1 20.0 3.9 20.5

Multiple sources of information 

provided

134 69 42 23 107 27 13 94 8 126

46.2 41.9 51.0 53.5 49.1 37.3 41.5 50.3 31.2 47.6

Total with formal overdraft 

program(s) that provide educational information

290 165 82 43 218 71 31 187 26 264

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

c

 Results include all institutions that offered at least one type of overdraft protection program. 
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

V.3.A. Comparative Information Provided

As mentioned, the majority of study population banks that had more than one type of overdraft program 

provided comparative information about program features and costs to consumers. Close to 60 percent 

of these institutions used multiple means to provide comparative information to consumers. A large 

majority used bank personnel to communicate the information (76.7 percent) or provided account 

brochures (56.3 percent). More than one-third of the institutions (37.3 percent) provided information 

via the deposit account agreement. Banks with overdraft programs that included automated programs 

were somewhat more likely than those with no automated overdraft program (i.e., operated only linkedaccounts, overdraft LOCs, or both) to use multiple sources to provide comparative information to 

consumers (65.9 percent versus 48.0 percent). A minority of institutions in the study reported providing 

comparative information only when asked (12.5 percent). This was more common at small banks 

(17.9 percent) than at medium and large banks (5.3 percent and 4.8 percent, respectively).

V.3.B. Educational Information Provided

Institutions were also asked if educational materials were provided to help customers use overdraft 

coverage wisely or efficiently. As shown in Table V-5, among the 1,006 institutions in the study with 

formal overdraft programs, almost one-third (28.8 percent) offered educational information. Large and 

medium banks were more likely to provide educational materials than small banks (about 41 percent for 

large and medium banks, compared with 23.5 percent for small banks). Among the 474 study population 

banks with automated overdraft programs, those that had promoted programs (374 banks) were more 

likely to provide educational materials than those operating nonpromoted automated programs (50.1 

percent versus 30.8 percent). Banks that covered ATM or POS/debit transactions were more likely to 

provide educational information than banks that did not cover such transactions (29.7 percent versus 

21.9 percent). Of study population institutions that distributed educational information, 46.2 percent 

used multiple methods to provide the material. The most common methods were fee sheets (53.3 

percent), brochures (51.3 percent), or some “other” method (40.5 percent).26 Relatively fewer institutions provided comparison charts (11.0 percent) or examples of costs involved in using overdraft 

programs (17.2 percent).

V.4. Product Line Information Provided to Consumers

The study yielded information on how the type and content of information provided to consumers 

differed by product line. Surveyed institutions were asked when and how banks informed customers 

about promoted automated overdraft programs, linked accounts, and overdraft LOC programs, as well as 

which program features were discussed with customers.27 As mentioned, the survey did not collect information on the quality or effectiveness of information and disclosures provided to customers.

V.4.A. When Information Was Provided

As reported in Table V-6, most institutions (82.1 percent) with promoted automated overdraft programs 

informed customers about the program at the point of account opening. Slightly more than half of institutions with promoted programs informed customers about the program upon request (52.1 percent), 

and 26.1 percent informed customers periodically with account updates. An additional 16.5 percent 

informed customers using some “other” method. There were no notable patterns across institutions by 

size group.

26 Additional common methods of offering educational information included other types of disclosures, policies, product guides, 

general account- or bank-related brochures or letters, and direct communication with bank employees.

27 Questions about information provided to customers were not asked of institutions operating nonpromoted automated 

programs as these programs, by definition, are not revealed to customers in advance.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Although the majority (58.1 percent) of the 374 study population institutions with promoted automated 

programs used several methods to inform customers about overdraft programs at various points in time, 

41.9 percent of banks used only one method. Twenty-nine percent of study population banks informed 

customers only at account opening. This was more common at small banks (36.4 percent), as compared 

with medium and large banks (approximately 20.0 percent). Four percent of study population banks 

informed customers about overdraft programs only when a customer asked.

In the case of linked accounts and overdraft LOCs, 61.9 percent of banks with linked accounts and 60.2 

percent of banks with overdraft LOCs notified customers of the programs at account opening (see Table 

V-7). For both program types, large banks were the most likely to notify customers at account opening. 

About one in three institutions with linked-account and overdraft LOC programs (30.7 percent and 

34.9 percent, respectively) informed customers of the programs only if asked.

Table V-6

Timing of Information Provided to Consumers for Promoted Automated Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

When did your institution inform its customers of the program? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

All instances that apply b (Multiple answers allowed)

When account is opened 307 176 91 39

82.1 83.6 80.3 79.6

Periodically with account updates 97 58 29 11

26.1 27.3 25.4 22.4

When asked by customers 195 100 72 23

52.1 47.3 63.4 46.9

Customers are not informed NA NA NA NA

 NA NA NA NA

Other 62 23 26 13

16.5 10.9 22.5 26.5

Total with promoted automated 374 211 114 49

100.0 100.0 100.0 100.0

All combinations

Only when account is opened 109 77 22 10

29.2 36.4 19.7 20.4

Only when asked 15 8 6 1

4.0 3.6 5.6 2.0

Only with periodic account updates 5 4 0 1

1.3 1.8 0.0 2.0

Only at other times 28 12 8 8

7.4 5.5 7.0 16.3

Customers are not informed 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

Informed at multiple times 217 111 77 29

58.1 52.7 67.6 59.2

Total with promoted automated 374 211 114 49

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

Note: NA = not applicable
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

V.4.B. How Information Was Provided

Study population banks used a variety of methods to provide customers with information about available 

overdraft programs (see Table V-8), and many banks (67.2 percent) used more than one method. About 

two-thirds of the institutions used bank personnel to inform customers about the features of promoted 

overdraft programs; slightly more than half (55.1 percent) used account brochures; 46.2 percent used 

letters or other special mailings; and 40.2 percent used deposit account agreements. Banks that used 

third-party vendors to administer their promoted automated programs were more likely to have multiple 

means of keeping customers informed; 78.1 percent of institutions with vendors used more than one 

method, compared with 51.2 percent of institutions that did not use vendors.

Approximately one-third (32.8 percent) of study population banks with promoted automated programs 

used only one method to provide information to customers. For these banks, letters or other special 

customer mailings and brochures were the most common methods used (14.7 percent).

Table V-7

Timing of Information Provided to Consumers for Linked-Account and Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total Banks with Linked Accounts by Asset Size Banks with LOCs by Asset Size

When did your institution inform its 

customers of the program?

All Linked 

Accounts

Less than 

$250 

Million

$250 Million 

to Less than 

$1 Billion

Greater 

than 

$1 Billion

All 

LOCs

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater 

than $1 

Billion

All instances that apply b (Multiple answers allowed)

When account is opened 450 307 87 57 353 207 85 61

61.9 61.1 60.0 70.4 60.2 56.2 63.1 72.6

Periodically with account updates 74 46 14 14 64 38 16 10

10.2 9.2 10.0 17.3 11.0 10.4 11.9 11.9

When asked by customers 562 380 117 65 480 299 117 64

77.2 75.6 81.1 80.2 81.8 81.2 86.9 76.2

Customers are not informed 20 15 3 1 0.0 0.0 0.0 0.0

2.7 3.1 2.2 1.2 0.0 0.0 0.0 0.0

Other 88 58 16 14 69 46 14 9

12.0 11.5 11.1 17.3 11.8 12.5 10.7 10.7

Total with program 728 502 144 81 587 368 135 84

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

All combinations

Only when account is opened 118 84 21 13 70 42 13 15

16.2 16.8 14.4 16.1 11.9 11.5 9.5 17.9

Only when asked 223 153 50 20 205 142 45 18

30.7 30.5 34.4 24.7 34.9 38.5 33.3 21.4

Only with periodic account updates 1 0 0 1 16 12 0 4

0.1 0.0 0.0 1.2 2.6 3.1 0.0 4.8

Only at other times NA NA NA NA 293 173 74 47

 NA NA NA NA 50.0 46.9 54.8 56.0

Customers are not informed 20 15 3 1 NA NA NA NA 

2.7 3.1 2.2 1.2 NA NA NA NA 

Informed at multiple times 366 249 71 46 3 0 3 0

50.3 49.6 48.9 56.8 0.5 0.0 2.4 0.0

Total with program 728 502 144 81 587 368 135 84

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

Note: NA = not applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Survey results showed that study population banks with linked accounts or overdraft LOCs used fewer 

means of informing customers about program features (see Table V-9). The most common means of 

providing information about linked accounts and overdraft LOCs was through bank personnel (83.4 

percent and 80.5 percent, respectively). Banks with linked accounts or overdraft LOCs were less likely 

than those with promoted automated overdraft programs to use deposit account agreements or account 

brochures to provide such information. These institutions were also much less likely to use a letter or 

special mailing (4.7 percent of institutions with linked accounts and 5.6 percent of institutions with 

overdraft LOCs, versus 46.2 percent for institutions with promoted programs). A fair percentage of 

study population banks relied solely on bank personnel to provide information about these types of 

programs to customers (41.8 percent of banks with linked accounts and 28.8 percent of banks with 

overdraft LOCs).

Table V-8

Means of Informing Consumers about Promoted Automated Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size By Vendor Use

With what means did your institution 

inform customers of the features of 

the program? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Does Not Use 

Vendor Uses Vendor

All instances that apply b (Multiple answers allowed)

Deposit account agreement 150 84 45 21 55 96

40.2 40.0 39.4 42.9 35.8 43.2

Brochure about accounts 206 107 66 33 70 136

55.1 50.9 57.7 67.3 46.3 61.2

Bank personnel 254 146 77 31 91 163

67.9 69.1 67.6 63.3 59.6 73.6

Letter or special mailing 173 96 58 19 44 129

46.2 45.5 50.7 38.8 28.6 58.2

Other 38 12 16 10 16 22

10.0 5.5 14.1 20.4 10.3 9.9

Total with promoted automated 374 211 114 49 152 222

100.0 100.0 100.0 100.0 100.0 100.0

All combinations

Only through deposit account 

agreement

24 19 5 0 11 13

6.4 9.1 4.2 0.0 7.1 5.9

Only through letter, special mailing, 

or brochure

55 27 19 9 35 20

14.7 12.7 16.9 18.4 22.9 9.2

Only by bank personnel 29 27 2 1 21 9

7.9 12.7 1.4 2.0 13.7 3.9

Only by other means 14 4 6 4 8 6

3.8 1.8 5.6 8.2 5.1 2.9

Informed at multiple times 251 134 82 35 78 173

67.2 63.6 71.8 71.4 51.2 78.1

Total with promoted automated 374 211 114 49 152 222

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

V.4.C. What Information Was Provided

Some of the key overdraft program features that help consumers make wise choices about overdraft 

program usage include information about applicable fees, covered transactions, transaction processing 

methods, applicable APRs, and coverage limits. As shown in Table V-10, nearly all study population 

banks with promoted automated programs (at least 97.5 percent) informed customers about two or more 

of these features. This pattern was similar across every size group. A large majority of these institutions 

informed customers of the schedule of fees (95.0 percent), the available coverage limit (89.6 percent), 

and information about the types of transactions covered (78.8 percent) at the time customers enrolled 

or were included in the program. The majority of these institutions also provided information on how 

transactions were processed (55.4 percent).

Table V-9

Means of Informing Consumers about Linked-Account and Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total Banks with Linked Accounts by Asset Size Banks with LOCs by Asset Size

With what means did your institution 

inform customers of the features of 

the program?

All Linked 

Accounts

Less than 

$250 

Million

$250 Million 

to Less than 

$1 Billion

Greater 

than $1 

Billion

All 

LOCs

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater 

than $1 

Billion

All instances that apply b (Multiple answers allowed)

Deposit account agreement 240 146 51 43 160 96 32 32

33.0 29.0 35.6 53.1 27.3 26.0 23.8 38.1

Brochure about accounts 194 127 47 21 213 115 63 35

26.7 25.2 32.2 25.9 36.2 31.3 46.4 41.7

Bank personnel 607 426 115 66 472 307 103 63

83.4 84.7 80.0 81.5 80.5 83.3 76.2 75.0

Letter or special mailing 34 23 6 5 33 19 5 9

4.7 4.6 4.4 6.2 5.6 5.2 3.6 10.7

Customer not informed 39 27 10 3 NA NA NA NA

5.4 5.3 6.7 3.7 NA NA NA NA

Other 60 31 21 8 133 81 34 19

8.2 6.1 14.4 9.9 22.7 21.9 25.0 22.6

Total with program 728 502 144 81 587 368 135 84

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

All combinations

Only through deposit account 

agreement

30 15 6 8 22 15 2 5

4.1 3.1 4.4 9.9 3.7 4.2 1.2 6.0

Only through letter, special mailing or 

brochure

13 8 5 1 22 12 6 4

1.9 1.5 3.3 1.2 3.7 3.1 4.8 4.8

Only by bank personnel 304 234 48 22 169 123 32 14

41.8 46.6 33.3 27.2 28.8 33.3 23.8 16.7

Only by other means 21 12 6 3 49 31 10 9

2.9 2.3 4.4 3.7 8.4 8.3 7.1 10.7

Customer not informed 39 27 10 3 NA NA NA NA

5.4 5.3 6.7 3.7 NA NA NA NA

Informed at multiple times 320 207 69 44 320 188 80 52

44.0 41.2 47.8 54.3 54.5 51.0 59.5 61.9

Item(s) not reported NA NA NA NA 5 0 5 0

 NA NA NA NA 0.8 0.0 3.6 0.0

Total with program 728 502 144 81 587 368 135 84

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

Note: NA = not applicable
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Banks with promoted automated programs that processed transactions by size starting with the largest 

were more likely to inform customers about transaction processing methods (63.0 percent) than those 

that processed transactions starting with the smallest (46.7 percent) or by non-size-related methods 

(55.9 percent). Banks that covered ATM or POS/debit transactions were less likely than banks that 

did not cover those transactions to provide information about which transactions were covered 

(77.1 percent versus 89.6 percent).

Approximately half of institutions with linked accounts (48.7 percent) and nearly all institutions with 

overdraft LOCs (92.8 percent) gave customers information about multiple program features. The majority of institutions that had linked-account programs provided a schedule of fees (68.5 percent) and information regarding transactions covered (59.3 percent). Institutions with overdraft LOCs most frequently 

informed consumers about the applicable APR (89.3 percent) and the dollar limit covered (83.6 

Table V-10

Content of Information Provided to Consumers about Promoted Automated Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size By Processing Method By Transactions Covered

Which features did your institution 

inform customers of when they 

enrolled or were included in the 

program? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

LargesttoSmallest

Not 

Size 

Related

SmallesttoLargest

Does Not 

Cover ATM or 

POS/Debit 

Covers 

ATM or 

POS/Debit 

All instances that apply b (Multiple answers allowed)

Fees 355 203 106 46 105 146 104 44 311

95.0 96.4 93.0 93.9 90.8 97.8 95.6 88.4 96.0

APR 20 15 3 1 4 9 7 0 20

5.2 7.3 2.8 2.0 3.3 5.8 6.5 0.0 6.0

Transactions coverage 294 161 91 42 94 108 92 45 250

78.8 76.4 80.3 85.7 81.6 72.7 84.1 89.6 77.1

Transactions processing 207 111 69 27 73 83 51 24 183

55.4 52.7 60.6 55.1 63.0 55.9 46.7 48.6 56.5

Dollar limit covered 335 192 101 42 99 133 103 47 288

89.6 90.9 88.7 85.7 85.8 89.2 94.1 92.8 89.1

Other 28 15 6 6 4 2 22 2 26

7.4 7.3 5.6 12.2 3.5 1.1 20.3 4.0 8.0

Total with promoted automated 374 211 114 49 116 149 109 50 324

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s): Number of banks 

with multiple features

364 211 107 46 114 143 107 48 317

Percent of banks with promoted 

automated program

97.5 100.0 94.4 93.9 98.3 96.1 98.5 94.8 97.9

All combinations

Only price 4 0 3 1 0 3 2 2 3

1.1 0.0 2.8 2.0 0.0 1.7 1.5 3.2 0.8

Only dollar limit 2 0 2 0 0 2 0 0 2

0.4 0.0 1.4 0.0 0.0 1.1 0.0 0.0 0.5

Only other features 4 0 2 2 2 2 0 1 3

1.0 0.0 1.4 4.1 1.7 1.1 0.0 2.0 0.8

Multiple features 364 211 107 46 114 143 107 48 317

97.5 100.0 94.4 93.9 98.3 96.1 98.5 94.8 97.9

Total with promoted automated 374 211 114 49 116 149 109 50 324

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

percent). Institutions operating overdraft LOC or linked-account programs were less likely than those 

that operated promoted automated programs to provide customers with information about fees, transaction processing, or coverage (see Table V-11).

V.4.D. Advertising Overdraft Programs

Among the 906 study population banks that operated promoted automated overdraft, linked-account, 

and overdraft LOC programs, more than 80 percent advertised in newspapers, on the radio, or on television in 2006; however, overdraft programs were generally not featured in these advertisements (see 

Table V-12). In the case of promoted automated programs, 7.9 percent of institutions that advertised in 

newspapers, radio, or television specifically featured the automated overdraft program. Large institutions 

(13.6 percent) and those that had promoted automated programs as the only formal overdraft program 

(14.9 percent) were more likely to feature them in advertising. For study population banks with linked 

accounts and overdraft LOCs, 1.6 percent and 3.6 percent, respectively, featured the overdraft program 

in advertising.

Among the small number of study population banks that featured promoted automated programs in their 

advertising (24 banks), two-thirds further reported that their advertisements were primarily geared 

toward promoting that program or prominently featured that program. Conversely, as Table V-13 shows, 

when study population banks advertised linked-account or overdraft LOC programs, emphasis was 

placed on the program relatively infrequently (16.0 percent and 18.4 percent, respectively). In the case 

of advertising through customer mailings in the year 2006, study population institutions were more likely 

to primarily or prominently feature promoted automated programs (16.9 percent) than linked accounts 

(1.8 percent) or overdraft LOCs (3.8 percent) (see Tables V-12 and V-13).

Table V-11

Content of Information Provided to Consumers 

about Linked-Account and Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total

Banks with Linked 

Accounts

Banks with Overdraft 

LOC Programs

Which features did your institution inform customers of 

when they enrolled or were included in the program?

All features that apply b (Multiple answers allowed)

Fees 498 385

68.5 65.7

APR 23 524

3.1 89.3

Transactions coverage 432 339

59.3 57.7

Transactions processing 202 204

27.7 34.7

Dollar limit covered N/A 490

N/A 83.6

Other 95 30

13.1 5.1

Total with program 728 587

100.0 100.0

Memo item(s): Number of banks with multiple features 355 545

Percent of banks with promoted automated program 48.7 92.8 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Table V-12

Advertising for Promoted Automated Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Presence of other 

Overdraft Programs

All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Automated 

Only

Automated 

and Other 

Programs

Did your institution send customer mailings prominently featuring the program?

Yes 63 50 6 7 17 46

16.9 23.6 5.6 14.3 21.0 15.8

No 310 161 107 42 64 247

83.1 76.4 94.4 85.7 79.0 84.2

Total with promoted automated 374 211 114 49 81 293

100.0 100.0 100.0 100.0 100.0 100.0

Did your institution advertise in newspapers, radio, or television? 

Yes 304 161 99 44 81 255

81.5 76.4 87.3 89.8 100.0 87.1

No 69 50 14 5 0 38

18.5 23.6 12.7 10.2 0.0 12.9

Total with promoted automated 374 211 114 49 81 293

100.0 100.0 100.0 100.0 100.0 100.0

If yes, did your institution feature the overdraft program? 

Yes 24 12 6 6 9 15

7.9 7.1 6.5 13.6 14.9 6.2

No 281 150 93 38 50 231

92.1 92.9 93.5 86.4 85.1 93.8

Total with promoted automated and 

advertised

304 161 99 44 58 246

100.0 100.0 100.0 100.0 100.0 100.0

If yes, was it featured prominently? 

Yes 16 8 3 5 5 11

66.4 66.7 50.0 83.3 55.8 72.4

No 8 4 3 1 4 4

33.6 33.3 50.0 16.7 44.2 27.6

Total with promoted automated and 

featured program in advertisement

24 12 6 6 9 15

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

V.5. ATM and POS/Debit Balance Disclosures

Surveyed institutions were asked whether balances at proprietary and nonproprietary ATMs showed 

overdraft coverage limits for purposes of their promoted automated overdraft programs or their overdraft 

LOC programs. The survey also asked questions related to the timing of NSF notifications in ATM and 

POS/debit transactions. NSF notification questions applied to banks with promoted and nonpromoted 

automated overdraft programs, as well as those that operated overdraft LOC programs.

V.5.A. Overdraft Coverage Limit Display

Among the 374 study population banks with a promoted automated program, 308 banks (81.4 percent) 

covered ATM withdrawals (see Table V-14). Of these banks, most (76.9 percent) did not display overdraft coverage limits at proprietary ATMs.The tendency to exclude the overdraft limit from ATM 

balances increased with bank size. A minority of the 308 study population banks (16.1 percent) displayed 

the overdraft limit at proprietary ATMs and did so separately from the account balance. Institutions 

Table V-13

Advertising for Linked-Account and Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total

Banks with Linked 

Accounts

Banks with Overdraft 

LOC Programs

Did your institution send customer mailings prominently featuring the program?

Yes 13 22

1.8 3.8

No 714 565

98.2 96.2

Total with program 728 587

100.0 100.0

Did your institution advertise in newspapers, radio, or television? 

Yes 621 488

85.3 83.2

No 107 99

14.7 16.8

Total with program 728 587

100.0 100.0

If yes, did your institution feature the overdraft program? 

Yes 10 17

1.6 3.6

No 611 471

98.4 96.4

Total with program and advertised 621 488

100.0 100.0

If yes, was it featured prominently? 

Yes 2 3

16.0 18.4

No 8 14

84.0 81.6

Total with program and featured program in advertisement 10 17

100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

that used vendors to operate their automated programs were more likely than those that did not (23.7 

percent versus 5.9 percent) to display the overdraft limit separately.

A small portion (7.1 percent) of study population banks with promoted automated programs that 

covered ATM transactions combined the overdraft limit with the account balance in the only balance 

displayed to customers at proprietary ATMs. Small banks were most likely to include the overdraft limit 

in a combined balance at proprietary ATMs (9.3 percent), and no large banks did so.

Among study population banks with overdraft LOCs (587 institutions), 87.6 percent (514 institutions) 

covered NSF transactions at ATMs (see Table V-15). Almost 70 percent of these 514 institutions did 

not list overdraft limits in ATM balances at proprietary machines, and 20.4 percent of banks displayed 

balances with the overdraft limit included. Another 12.0 percent of banks with overdraft LOC programs 

that covered ATM transactions listed the credit limit separately. This practice was more common as 

bank size increased (24.3 percent of large institutions listed the limit separately).

In general, study population banks with promoted automated overdraft and overdraft LOC programs 

reported results for institutional practices for nonproprietary ATMs that were similar to those reported 

for proprietary ATMs. In some cases, study population banks (15.5 percent of those with promoted automated programs and 13.8 percent of those with overdraft LOCs) did not know how balances were 

displayed at nonproprietary ATMs.

Table V-14

Balances Shown at ATMs for Promoted Automated Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size By Vendor Use

Did your institution show overdraft coverage limits at 

balances provided at proprietary ATMs/

nonproprietary ATMs? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater 

than 

$1 Billion

Uses 

Vendor

Does Not 

Use Vendor

Proprietary ATMs

Overdraft limit is not shown in any ATM balance 237 119 82 36 125 112

76.9 72.1 81.0 85.7 71.1 84.6

Overdraft limit is included in the only balance shown 22 15 6 0 9 12

7.1 9.3 6.3 0.0 5.3 9.5

Overdraft limit is shown but listed separately 50 31 13 6 42 8

16.1 18.6 12.7 14.3 23.7 5.9

Total with promoted automated that covers ATM 

transactions

308 165 101 42 176 132

100.0 100.0 100.0 100.0 100.0 100.0

Nonproprietary ATMs

Overdraft limit is not shown in any ATM balance 221 111 80 30 118 104

71.9 67.4 79.4 71.4 66.8 78.7

Overdraft limit is included in the only balance shown 17 12 5 1 6 11

5.6 7.0 4.8 2.4 3.7 8.2

Overdraft limit is shown but listed separately 22 12 8 2 20 2

7.0 7.0 7.9 4.8 11.3 1.2

Do not know 48 31 8 9 32 16

15.5 18.6 7.9 21.4 18.2 11.9

Total with promoted automated that covers ATM 

transactions

308 165 101 42 176 132

100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s): Number of banks with promoted automated programs that do not cover ATM transactions66 46 13 7 46 20

Percent of study population banks 17.6 21.8 11.3 14.3 20.5 13.3

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

V.5.B. Customer NSF Notification

As discussed in Section IV, institutions often charged customers an NSF fee when overdrafts occurred. 

It is helpful for consumers to have a warning before an NSF fee is charged at an ATM or POS/debit 

terminal. Accordingly, institutions were asked when a customer was notified that an ATM or POS/debit 

transaction would result, or resulted in, an NSF. In particular, institutions were asked whether customers 

were notified at the time of the transaction, either before or after the completion of the transaction; 

subsequent to the transaction, such as by mail or e-mail; or using some other method.

Table V-16 shows that among the survey population banks with automated overdraft programs that 

covered NSFs at ATMs (385 banks), less than one-quarter (23.5 percent) informed customers at the 

time of the transaction, prior to its completion. Instead, a slight majority (54.5 percent) informed the 

customer subsequent to the transaction, via notification such as mail or e-mail, rather than at the time of 

the transaction; slightly more than16 percent notified customers about NSFs at the time of the transaction, but after its completion.

For study population institutions with automated overdraft programs that covered POS/debit transactions (403 banks), only 7.9 percent of such banks notified customers of an NSF at the time of a POS/

debit transaction prior to completing the transaction. Instead, the majority (86.2 percent) informed the 

customer about an NSF subsequent to the time of the transaction, such as via mail or e-mail.

Table V-15

Balances Shown at ATMs for Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

Did your institution show overdraft coverage limits at balances 

provided at proprietary ATMs/nonproprietary ATMs? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Proprietary ATMs

Overdraft limit is not shown in any ATM balance 347 234 75 38

67.5 73.5 61.8 51.4

Overdraft limit is included in the only balance shown 105 61 26 18

20.4 19.3 21.1 24.3

Overdraft limit is shown but listed separately 62 23 21 18

12.0 7.2 17.1 24.3

Total with overdraft LOC programs that covers ATM transactions 514 318 122 74

100.0 100.0 100.0 100.0

Nonproprietary ATMs

Overdraft limit is not shown in any ATM balance 341 230 74 37

66.3 72.3 60.5 50.0

Overdraft limit is included in the only balance shown 80 50 16 14

15.5 15.7 13.2 18.9

Overdraft limit is shown but listed separately 22 0 11 11

4.3 0.0 9.2 14.9

Do not know 71 38 21 12

13.8 12.1 17.1 16.2

Total with overdraft LOC programs that covers ATM transactions 514 318 122 74

100.0 100.0 100.0 100.0

Memo item(s): Number of banks with overdraft LOC programs 

that does not cover ATM transactions

73 50 13 10

Percent of study population banks 12.4 13.5 9.5 11.9 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

Among institutions with automated programs, institutions with nonpromoted overdraft programs were 

more likely than institutions with promoted programs to inform the customer of an NSF at the time of 

the transaction, prior to transaction completion (31.0 percent versus 21.7 percent for ATM transactions 

and 19.6 percent versus 5.0 percent for POS/debit transactions).

Compared with study population banks with automated overdraft programs, banks with overdraft LOCs 

were slightly less likely to notify customers of an ATM NSF at the time of the transaction, prior to transaction completion (15.8 percent for overdraft LOC programs versus 23.5 percent for automated overdraft 

programs), and somewhat more likely to inform customers subsequent to the time of the transaction, via 

notification such as mail or e-mail (65.7 percent versus 54.5 percent) (see Tables V-16 and V-17). The 

reverse was true, however, for POS/debit transactions. Study population banks with overdraft LOCs that 

covered POS/debit transactions were slightly more likely than those with automated overdraft programs 

to notify customers of an NSF prior to a transaction’s completion (12.6 percent for overdraft LOC 

Table V-16

Customer Notification of ATM and/or POS/Debit NSF for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of Automated 

Program

When did your institution notify a customer 

when an ATM or POS/debit transaction 

resulted in an NSF? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Nonpromoted Promoted

ATM transactions

At the time of transaction, prior to completion 91 42 30 18 24 67

23.5 21.2 25.7 26.9 31.0 21.7

At the time of transaction, after completion 62 35 13 15 16 46

16.2 17.3 10.8 22.4 20.9 15.0

Subsequent to transaction 210 115 66 29 34 176

54.5 57.7 55.4 43.3 43.5 57.2

Otherb 22 8 10 5 4 19

5.8 3.8 8.1 7.5 4.7 6.1

Total with automated that covers ATM 

transactions

385 199 119 67 77 308

100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s): Number of banks with automated program that do not cover ATM 

transactions

89 54 19 16 23 66

Percent of study population banks 18.8 21.2 14.0 19.3 23.0 17.6

POS/debit transactions

At the time of transaction, prior to completion 32 19 10 3 16 16

7.9 9.1 7.9 4.3 19.6 5.0

At the time of transaction, after completion 11 4 5 2 2 9

2.6 1.8 3.9 2.9 2.0 2.8

Subsequent to transaction 347 180 106 61 61 286

86.2 85.5 86.8 87.1 75.9 88.7

Otherb 13 8 2 4 2 11

3.3 3.6 1.3 5.7 2.5 3.5

Total with automated that covers 

POS/debit transactions

403 211 122 70 80 323

100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s): Number of banks with automated program that does not cover POS/debit 

transactions

71 42 16 13 20 51

Percent of study population banks 15.0 16.7 11.6 15.7 20.0 13.7 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Includes one missing observation.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey V. Customer Enrollment, Marketing, and Disclosure Practices

programs versus 7.9 percent for automated overdraft programs), and somewhat less likely to inform 

customers subsequent to the time of the transaction through customer notification (76.7 percent versus 

86.2 percent).

V.6. Summary

The survey gathered information related to how overdraft programs are offered to new customers and 

opt-in/opt-out features of the overdraft programs. In most cases, survey disclosure results regarding automated overdraft programs applied only to promoted programs. As mentioned, more than half of the 

transaction deposit dollars held in study population banks were maintained in institutions with nonpromoted automated overdraft programs. Therefore, some of the marketing and survey disclosure results 

presented in this section may not apply to a significant number of customers with nonpromoted automated programs.

Table V-17

Customer Notification of ATM and/or POS/Debit NSF for Overdraft LOC Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

When did your institution notify a customer when an ATM or POS/

debit transaction resulted in an NSF? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

ATM transactions

At the time of transaction, prior to completion 81 50 19 12

15.8 15.7 15.8 16.2

At the time of transaction, after completion 46 31 10 6

9.0 9.6 7.9 8.1

Subsequent to transaction 338 215 80 43

65.7 67.5 65.8 58.1

Other 49 23 13 13

9.5 7.2 10.5 17.6

Total with overdraft LOC programs that covers ATM transactions 514 318 122 74

100.0 100.0 100.0 100.0

Memo item(s): Number of banks with overdraft LOC programs that 

do not cover ATM transactions

73 50 13 10

Percent of study population banks 12.4 13.5 9.5 11.9

POS/debit transactions

At the time of transaction, prior to completion 64 46 10 8

12.6 15.0 7.8 10.5

At the time of transaction, after completion 14 12 2 1

2.8 3.8 1.3 1.3

Subsequent to transaction 388 230 101 57

76.7 75.0 81.8 75.0

Other 40 19 11 10

8.0 6.3 9.1 13.2

Total with overdraft LOC programs that covers POS/Debit 

transactions

506 307 123 76

100.0 100.0 100.0 100.0

Memo item(s): Number of banks with overdraft LOC programs that 

do not cover POS transactions

81 61 11 8

Percent of study population banks 13.7 16.7 8.3 9.5

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

About half of the institutions in the study with multiple overdraft programs (45.6 percent) offered all 

programs available to new customers. However, approximately one-fifth of institutions (19.3 percent) 

offered only promoted automated programs unless the customer specifically requested alternative overdraft options.

Customers in the majority of study population banks operating automated programs (75.1 percent) were 

automatically enrolled in the programs, but were allowed to affirmatively request to be removed from, or 

opt out of, the program. Some banks commented that customers were not given the choice to opt in or 

out of the program; this comment was most often reported for institutions with nonpromoted automated 

programs. In contrast, the large majority of banks with linked-account programs (94.7 percent) followed 

an opt-in policy. Customers have to apply and qualify for an overdraft LOC program, so it was assumed 

that these were opt-in programs.

The survey also gathered information on the frequency and methods of providing information to 

consumers about overdraft programs. Nearly all banks, especially large banks, provided consumers with 

some type of information about overdraft programs. These survey results, however, provided no evidence 

of the quality and adequacy of the information provided to consumers.

Most study population banks that operated promoted automated programs that covered ATM transactions (76.9 percent) did not display overdraft coverage limits at proprietary ATMs. Sixteen percent of 

banks with promoted automated overdraft programs that covered ATM transactions did so separately 

from the account balance. About 7 percent of the study population banks with promoted automated 

overdraft programs that covered ATM transactions combined the overdraft limit with the account 

balance in the only account balance displayed to customers at proprietary ATMs. This practice was more 

common among small banks (9.3 percent).

Additional opportunities for disclosure were evident when considering the information provided to a 

customer at the time of, or subsequent to, the transaction. Most study population banks whose automated overdraft program covered ATM and POS/debit transactions informed customers of an NSF only 

after the transaction had been completed (88.8 percent of banks for POS/debit and 70.7 percent of 

banks for ATMs), such as by mail or e-mail after the transaction. In the case of ATM transactions, less 

than one-quarter of study population banks alerted their customers prior to the completion of a transaction that the transaction would result in an overdraft. In the case of POS/debit transactions, only 7.9 

percent of banks notified customers that completing a given transaction would result in an NSF. This 

was more likely among small banks. Among study population banks operating automated overdraft 

programs, banks with nonpromoted programs were more likely than those with promoted programs to 

alert customers before completing the transaction, for both ATM and POS/debit transactions.

VI. Internal Controls and Monitoring Systems

Surveyed institutions were asked whether written policies and procedures were adopted to address risks 

associated with overdraft programs and practices, and about the content of these written policies. Banks 

were also asked about practices surrounding compliance reviews and ongoing monitoring of overdrafts.

VI.1. Written Policies

When asked whether study population banks adopted written policies and procedures to address the 

operational and other risks associated with overdraft programs, a large majority of institutions with automated overdraft programs (83.0 percent) reported having written policies. This was the case for 64.2 

percent of banks with overdraft LOC programs and 22.7 percent of institutions with linked-account 
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

programs (see Table VI-1). For these formal overdraft programs, the larger the institution, the more 

likely it had adopted written policies and procedures. For example, for study population banks with automated overdraft programs, 94.0 percent of large banks had written policies compared with 75.8 percent 

of small banks.

Table VI-1

Overdraft Program Policies for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of Automated 

Program

All Banks with 

Linked Accounts or 

LOC Programs

All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Nonpromoted Promoted

All Linked 

Accounts All LOCs

Did your institution have a written policy?

No 81 61 14 5 22 59 563 210

17.0 24.2 10.5 6.0 21.5 15.8 77.3 35.8

Yes 393 192 123 78 79 315 165 377

83.0 75.8 89.5 94.0 78.5 84.2 22.7 64.2

Total with program 474 253 138 83 100 374 728 587

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100

If yes, did the policy set a credit limit?

No 46 27 11 8 18 28 NA 179

11.7 14.0 9.1 10.3 23.0 8.9 NA 47.5

Yes 347 165 112 70 61 287 NA 198

88.3 86.0 90.9 89.7 77.0 91.1 NA 52.5

Total with program and written 

policy

393 192 123 78 79 314 NA 377

100.0 100.0 100.0 100.0 100.0 100.0 NA 100

If yes, what other features were included in the policy? b (Multiple Answers Allowed)

Fees 318 161 98 59 51 267 104 170

80.8 84.0 79.2 75.6 65.0 84.8 63.1 45.0

APR NA NA NA NA NA NA NA 184

 NA NA NA NA NA NA NA 48.8

Customer disclosure process 194 96 61 37 0 194 89 160

49.3 50.0 49.4 47.4 0.0 61.6 54.2 42.5

Customer notification timeline 285 130 96 58 51 234 74 150

72.4 68.0 77.9 74.4 64.7 74.3 45.1 39.8

Repayment period 328 157 106 65 53 276 NA 166

83.4 82.0 85.7 83.3 66.8 87.6 NA 44.0

Charge-off timeline 309 150 98 62 53 257 NA 147

78.7 78.0 79.2 79.5 66.8 81.7 NA 39.2

Workout procedures 177 73 64 40 24 153 NA 95

45.0 38.0 52.0 51.3 30.3 48.7 NA 25.2

Other 51 19 24 8 15 36 31 124

13.0 10.0 19.5 10.3 18.9 11.6 19.1 33.0

Total with program and written 

policy

393 192 123 78 79 314 165 377

100.0 100.0 100.0 100.0 100.0 100.0 100 100 a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

Note: NA = not applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

Institutions were asked whether specific overdraft program features were covered in their written policies, including overdraft coverage caps (for automated and overdraft LOC programs and ad hoc practices only), overdraft fees, disclosure-related procedures (not applicable for nonpromoted automated 

programs), and overdraft repayment timeline and procedures (not applicable for linked-account 

programs).

Among study population banks with automated overdraft programs that had written policies, 88.3 

percent included a cap on the dollar amount available to be extended to a customer. This was more 

prevalent among promoted automated programs (91.1 percent) than nonpromoted programs (77.0 

percent). Among study population banks operating overdraft LOCs that had written policies, more than 

half (52.5 percent) set caps on maximum advances available to be extended to customers.

For more than 80 percent of banks with automated overdraft programs, written policies covered all associated fees, although institutions with promoted programs (84.8 percent) were more likely to include 

associated fees in those policies than banks with nonpromoted programs (65.0 percent). Written policies 

for institutions with automated overdraft programs were also likely to cover customer notification timelines, repayment periods, and charge-off timelines. Written policies governing promoted automated overdraft programs were more likely than those governing nonpromoted programs to include each specific 

feature. There were no notable patterns across bank groups based on asset size (see Table VI-1).

Study population banks with written policies for linked-account and overdraft LOC programs were 

generally less likely to cover specific program features in those policies, compared with automated overdraft programs (see Table VI-1). For example, only 63.1 percent of banks with written policies for linkedaccount programs and 45.0 percent for overdraft LOCs included information about all associated fees.

VI.2. Compliance Review Prior to the Implementation of the Overdraft Program

To assess the level of preliminary compliance review conducted, institutions were asked whether counsel, 

management, the institution’s board of directors, or someone else reviewed overdraft programs for 

compliance with applicable laws prior to implementation of a given program. As Table VI-2 shows, more 

than 95 percent of institutions with automated overdraft programs reported that their programs were 

reviewed by at least one of the parties identified in the survey, whether inside or independent from the 

bank. Bank management review was common (85.4 percent) for automated overdraft programs, and 

board of directors review was fairly common (62.7 percent) (see Table VI-2). Five percent of institutions 

with automated overdraft programs reported that no compliance review was conducted prior to 

implementation.

Among study population banks with linked-account and overdraft LOC programs, compliance review by 

bank management was also the most common type of review performed before implementing the overdraft program (54.5 percent and 67.6 percent, respectively). Institutions operating linked-account and 

overdraft LOCs reported that their programs had not initially been reviewed for compliance in 23.1 

percent and 12.9 percent of the cases, respectively.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

VI.3. Methods for Monitoring and Evaluating Overdraft Programs

When asked how often senior management evaluated overdraft programs in the year 2006—including 

reviewing overdraft activity, heavy usage, income, and losses—the majority of institutions with automated overdraft programs (58.4 percent) reported conducting reviews 12 times per year (monthly) (see 

Table VI-3). However, 30.2 percent reviewed their programs less frequently, including 16.4 percent of 

institutions that reported no evaluations of their automated overdraft program in 2006. As Table VI-3 

shows, senior management evaluation of the overdraft program occurred at 36.2 percent of institutions 

with linked accounts and at 52.9 percent of institutions with overdraft LOCs for the year 2006.

Study population banks generally used a variety of methods to monitor and evaluate overdraft program 

performance, which is also noted in Table VI-3.28 Based on the results collected in the survey, the most 

common monitoring and evaluation method for automated overdraft programs was self-evaluation 

(73.0 percent), which was particularly common among medium and large institutions (84.9 percent and 

81.9 percent, respectively). Although some banks used vendors or consultants to provide additional 

monitoring, nearly half (48.3 percent) of the institutions with automated programs used self-evaluation 

exclusively. The next-most-common monitoring method for banks with automated programs was the 

use of reports provided by vendors (32.4 percent). About 13 percent of institutions with automated 

programs did not regularly evaluate automated overdraft program performance. Small institutions were 

most likely to respond that they did not regularly evaluate automated overdraft program performance 

(16.7 percent of small institutions, compared with 8.1 percent of medium institutions and 7.2 percent of 

large institutions).

28 In particular, institutions were asked if one or more of the following methods were used to monitor and evaluate performance 

of the overdraft program: vendor-supplied reports, self-evaluation, outside consultant evaluation, no regular evaluation, or “other.”

Table VI-2

Compliance Review Policies for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

All Banks with Linked 

Accounts or LOC Programs

Did your institution review the program 

for compliance with applicable laws 

prior to implementation? b

(Multiple answers allowed) All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

All Linked 

Accounts All LOCs

Yes, by bank counsel 107 38 30 38 27 84

22.5 15.2 22.1 45.8 3.7 14.3

Yes, by independent counsel 113 58 32 23 23 42

23.8 22.7 23.3 27.7 3.1 7.2

Yes, by bank management 405 207 127 71 397 397

85.4 81.8 91.9 85.5 54.5 67.6

Yes, by bank board 297 169 87 42 187 233

62.7 66.7 62.8 50.6 25.7 39.7

Not reviewed 22 15 3 3 168 76

4.5 6.1 2.3 3.6 23.1 12.9

Other 78 35 35 8 65 117

16.4 13.6 25.6 9.6 8.9 19.9

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

Similar to automated overdraft programs, the most common monitoring and evaluation method for 

linked-account and overdraft LOC programs was self-evaluation (34.9 percent and 54.6 percent, respectively). However, 57.8 percent of institutions operating linked accounts and 36.7 percent with overdraft 

LOCs reported that they did not monitor and evaluate their overdraft program performance.

Table VI-3

Evaluation of Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

All Banks with Linked 

Accounts or LOC Programs

All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

All Linked 

Accounts All LOCs

How many times did senior management evaluate the program in 2006?

More than 12 times 54 31 14 9 36 44

11.4 12.1 10.5 10.8 5.0 7.5

12 times 277 138 90 49 164 158

58.4 54.5 65.1 59.0 22.5 27.0

Less than 12 times 65 35 21 10 63 108

13.8 13.6 15.1 12.1 8.7 18.4

Never 78 50 13 15 464 276

16.4 19.7 9.3 18.1 63.8 47.1

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100.0 100.0

How did your institution evaluate and monitor overdraft programs? b (Multiple answers allowed)

Vendor provides reports 154 92 47 15 32 29

32.4 36.4 33.7 18.1 4.5 4.9

Self-evaluation 346 161 117 68 254 320

73.0 63.6 84.9 81.9 34.9 54.6

Consultant conducts evaluation 14 4 6 4 3 16

3.0 1.5 4.7 4.8 0.4 2.7

Evaluations are not conducted 59 42 11 6 420 216

12.5 16.7 8.1 7.2 57.8 36.7

Other 25 15 5 5 33 21

5.3 6.1 3.5 6.0 4.6 3.5

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100.0 100.0

How did your institution evaluate and monitor overdraft programs? All combinations

Evaluations are not conducted 59 42 11 6 420 216

12.5 16.7 8.1 7.2 57.8 36.7

Self-evaluation only 229 104 71 55 236 300

48.3 40.9 51.2 66.3 32.4 51.2

Vendor, consultant and/or other 185 107 56 22 65 63

39.1 42.4 40.7 26.5 8.9 10.8

Item(s) not reported NA NA NA NA 7 7

NA NA NA NA 0.9 1.3

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

b

 Percentage shares do not sum to 100.0 percent because all answers that apply are included.

Note: NA = No applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

VI.4. Ongoing Customer-Level Monitoring of Overdraft Programs

The survey also collected information on bank monitoring of customer-level usage and accrual of fees 

and interest, extensive use of overdraft programs by customers, denial of coverage (automated overdraft 

programs only), and complaint frequency.

Among study population banks with automated overdraft programs, 74.0 percent maintained customerlevel information about usage, fees, and interest accrued (see Table VI-4). In particular, 60.1 percent of 

banks with automated overdraft programs reported monitoring excessive overdraft usage. No major 

differences were reported across the different asset-size groups.

Among study population banks with linked accounts and overdraft LOCs, 34.0 percent and 64.0, respectively, maintained customer-level information about usage, fees, and interest accrued for these overdraft 

programs. Excessive overdraft program usage was monitored by 25.8 percent of banks with linked 

accounts and 29.1 percent of banks with overdraft LOCs.

The survey also asked institutions with automated overdraft programs about special monitoring of NSF 

or overdraft fees and activity for individual accounts that were largely funded by fixed, nonattachable 

income, such as Social Security and Veterans Administration payments. As shown in Table VI-5, most 

institutions with automated overdraft programs (94.2 percent) responded that they did not conduct this 

type of monitoring.

The survey also gathered information on whether study population banks with promoted automated 

programs (374 institutions) denied overdraft coverage in 2006 for a customer in good standing, even 

when there were sufficient funds within the institution’s policy limits. Very few institutions (2.2 percent) 

reported denying coverage of an NSF item for that year (see Table VI-5).

In addition, surveyed institutions were asked to report the number of complaints received in 2006 

related to the various types of overdraft programs operated (see Table VI-6). Among study population 

banks with automated overdraft programs, 12.5 percent received at least one complaint related to the 

program in 2006. Large institutions were more likely to receive complaints about automated programs; 

Table VI-4

Maintenance of Consumer Information and Monitoring of Excessive Use of Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

All Banks with Linked 

Accounts or LOC Programs

All 

Automated

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

All Linked 

Accounts All LOCs

Did your institution maintain customer-level information on usage, fees, and interest

Yes 351 180 107 63 248 375

74.0 71.2 77.9 75.9 34.0 64.0

No 123 73 30 20 480 211

26.0 28.8 22.1 24.1 66.0 36.0

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100 100

Did your institution monitor for excessive usage?

Yes 285 153 87 45 188 171

60.1 60.6 62.8 54.2 25.8 29.1

No 189 100 51 38 540 416

39.9 39.4 37.2 45.8 74.2 70.9

Total with program 474 253 138 83 728 587

100.0 100.0 100.0 100.0 100 100

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VI. Internal Controls and Monitoring Systems

21.7 percent of large institutions received at least one complaint, compared with about 10.5 percent of 

small and medium institutions. Institutions with nonpromoted automated programs were more likely 

(25.0 percent) to receive complaints about the overdraft program than institutions with promoted 

programs (9.1 percent). Also, among banks with automated overdraft programs, institutions that covered 

ATM or POS/debit transactions were more likely to receive complaints (13.7 percent of banks that 

covered ATM or POS/debit transactions, compared with 5.5 percent of banks that did not cover these 

transactions). In contrast, complaints were rare in institutions with linked-account (0.5 percent) and 

overdraft LOC programs (1.4 percent).

Table VI-5

Other Monitoring of Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Did your institution monitor accounts funded by fixed, non-attachable income

Yes 25 15 8 2

5.3 6.1 5.8 2.4

No 447 238 130 79

94.2 93.9 94.2 95.2

Item(s) not reported 2 0 0 2

0.4 0.0 0.0 2.4

Total with automated 

474 253 138 83

100.0 100.0 100.0 100.0

Has your institution denied an NSF item although sufficient funds were available?

Yes 8 4 3 1

2.2 1.8 2.8 2.0

No 366 207 111 48

97.8 98.2 97.2 98.0

Total with promoted automated 374 211 114 49

100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.

Note(s): Question was asked only of institutions with promoted automated programs.

Table VI-6

Complaints about Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of 

Automated Program

By Transactions 

Covered

All Banks with 

Linked Accounts 

or LOC Programs

Has your institution 

received any complaints 

about the program? All

Less 

than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Nonpromoted Promoted

Does Not 

Cover ATM 

or POS/

Debit

Covers 

ATM or 

POS/Debit

All 

Linked 

Accounts

All 

LOCs

Yes 59 27 14 18 25 34 4 55 4 8

12.5 10.6 10.5 21.7 25.0 9.1 5.5 13.7 0.5 1.4

No 415 226 123 65 75 340 66 348 724 578

87.5 89.4 89.5 78.3 75.0 90.9 94.5 86.3 99.5 98.6

Total with program 474 253 138 83 100 374 70 404 728 587

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VII. The Role of Vendors and Third Parties in Overdraft Practices

VI.5. Summary

Most study population banks with automated overdraft programs (83.0 percent) adopted written policies 

and procedures addressing operational and other program risks. These written policies were more prevalent among large banks (94.0 percent). In general, policies covering automated overdraft programs—

and more so for promoted programs—were likely to address each of the program features identified in 

the survey. When institutions maintained policies and procedures for linked-account and overdraft LOC 

programs, it was less likely that specific program features were covered.

Management review was the most common type of compliance review that study population banks 

performed before implementing the automated overdraft program (85.4 percent of banks with automated 

overdraft programs). More than half of the banks with automated overdraft programs reviewed the 

program on a monthly basis during 2006; however, 16.4 percent reported no evaluations of the automated program during this period. Self-evaluation was the most common method used to monitor and 

evaluate program performance.

Almost three-quarters of study population banks with automated overdraft programs maintained customer-level information on usage, fees, and interest accrued by their programs. While the majority 

of institutions reported monitoring for excessive usage of the overdraft program, about 40 percent of 

institutions did not. When overdraft coverage was within the institution’s policy limits, denial of NSF 

transactions among banks with promoted automated overdraft programs was rare (2.2 percent). Also, 5.3 

percent of banks with automated overdraft programs monitored accounts largely funded by fixed, nonattachable income.

Of the study population banks with automated overdraft programs, 12.5 percent received consumer 

complaints about these programs. These complaints were more common for large institutions 

(21.7 percent versus 10.6 for small banks), institutions with nonpromoted programs (25.0 percent, 

compared with 9.1 percent of banks with promoted programs), and institutions that covered NSFs at 

ATMs and POS/debit terminals (13.7 percent versus 5.5 percent of banks with automated overdraft 

programs that did not cover these types of transactions). In contrast, complaints about linked accounts 

were reported by less than 1 percent of banks, and LOC overdraft program complaints were reported by 

less than 1.5 percent of banks operating these programs.

VII. The Role of Vendors and Third Parties 

in Overdraft Practices

In recent years, third-party vendors have played a significant role in the development and implementation of automated overdraft programs, particularly at smaller banks. Vendor-provided overdraft programs 

have been marketed as tools to enhance an institution’s internal reporting system for overdraft-related 

activities. Regulators and others have found, however, that vendor-supplied overdraft programs generally 

differ from in-house programs in that vendor programs feature “marketing plans that appear designed to 

promote the generation of fee income.”29 To better understand the role of third-party vendors in the 

provision of overdraft services, the survey asked institutions that operated an automated overdraft 

program a variety of questions concerning third-party vendor usage, contract duration, and 

compensation.30

29 See the Regulation DD (Truth in Savings) Final Rule at 70 Fed. Reg. 29582 (May 24, 2005); see also Joint Guidance on Overdraft 

Protection Programs at 70 Fed. Reg. 9127 (Feb. 24, 2005).

30 Institutions were not asked these questions in connection with linked-account or overdraft LOC programs.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VII. The Role of Vendors and Third Parties in Overdraft Practices 

VII.1. Vendor Usage

As Table VII-1 shows, 54.2 percent of study population banks with automated overdraft programs used a 

vendor at the time of the survey. Institutions with promoted automated programs were more likely to use 

an outside vendor; about 59.3 percent of institutions with promoted programs used an outside vendor to 

implement and manage the program as of the survey date, compared with 35.3 percent of institutions 

that had nonpromoted programs. In the study, small banks were more likely than large banks to use 

outside vendors to manage the overdraft program (62.1 percent versus 31.3 percent).

Among study population banks with automated programs and that used vendors, 83.9 percent reported 

using vendors to initially establish or expand automated overdraft programs. Institutions with promoted 

programs were more likely to implement programs using a vendor; 88.4 percent of banks with promoted 

programs initially established or expanded those programs using a third-party vendor, compared with 

55.6 percent of institutions with nonpromoted programs. The tendency to contract with a vendor to 

initiate or expand an automated overdraft program was relatively consistent among small, medium, and 

large institutions.

Study population banks that used vendors to implement or manage automated overdraft programs were 

also asked how long the vendor-supplied program(s) were used (see Table VII-2). Survey results show a 

steady increase in institutions’ use of vendors to implement and manage automated overdraft programs in 

the six years preceding the survey date. Close to 90 percent of institutions using vendor-supplied automated overdraft programs began using them in the six years prior to the survey, and 70.2 percent started 

relationships with these vendors at some point during the four years prior to the survey. More than 

one-third of the institutions that used vendors (36.4 percent) had been doing so for less than two years. 

This trend was more pronounced among small banks and banks with nonpromoted overdraft programs. 

Most small banks (75.6 percent) that used vendors at the time of the survey began relationships with 

vendors within the prior four years. In contrast, among large institutions, 46.1 percent used vendors for 

less than four years.

Table VII-1

Institutions’ Relationships with Vendors for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of Automated 

Program

All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion Nonpromoted Promoted

Did your institution use a vendor?

Yes 257 157 74 26 35 222

54.2 62.1 53.5 31.3 35.3 59.3

No 216 96 64 56 64 152

45.6 37.9 46.5 67.5 63.7 40.7

Item(s) not reported 1 0 0 1 1 0

0.2 0.0 0.0 1.2 1.0 0.0

Total with automated 474 253 138 83 100 374

100.0 100.0 100.0 100.0 100.0 100.0

If your institution used a vendor, was the overdraft program established or expanded through a vendor? 

Yes 216 130 64 21 20 196

83.9 82.9 87.0 80.8 55.6 88.4

No 41 27 10 5 16 26

16.1 17.1 13.0 19.2 44.4 11.6

Total with automated using vendor 257 157 74 26 35 222

100.0 100.0 100.0 100.0 100.0 100.0

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VII. The Role of Vendors and Third Parties in Overdraft Practices 

Study population banks with nonpromoted programs generally started vendor relationships more recently 

than those with promoted programs. Nearly half of the study population banks with nonpromoted 

programs that used vendors (48.9 percent) started doing so within two years prior to the survey, 

compared with 34.4 percent of promoted programs. About one-tenth of the institutions (10.7 percent) 

used vendors for more than six years prior to the survey (9.5 percent of banks with promoted programs 

and 18.2 percent of banks with nonpromoted programs).

Among study population banks with automated overdraft programs, large institutions and institutions 

with promoted programs were more likely to have shorter vendor contract terms (see Table VII-2). More 

than half (54.3 percent) of the contract terms for institutions with promoted automated programs were 

in the two- to four-year range, nearly one-third (31.9 percent) were shorter, and only 13.8 were longer 

than four years. In contrast, 51.7 percent of the study population banks with nonpromoted programs had 

an average vendor contract duration of at least four years.

As Table VII-3 shows, nearly two-thirds of institutions in the study with automated programs that 

purchased overdraft programs from a vendor (62.9 percent) used standardized or off-the-shelf programs. 

Slightly more than one-third (36.3 percent) purchased programs customized for the institution. Among 

study population banks that used vendors to manage their automated overdraft program, small banks 

Table VII-2

Length of Vendor Relationships for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of Automated 

Program

All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Nonpromoted Promoted

How long has your institution used your vendor?

0-2 years 94 69 18 7 17 76

36.4 43.9 23.9 26.9 48.9 34.4

2-4 years 87 50 32 5 11 76

33.8 31.7 43.5 19.2 30.1 34.4

4-6 years 49 31 11 7 1 48

19.0 19.5 15.2 26.9 2.8 21.6

More than 6 years 27 8 13 7 6 21

10.7 4.9 17.4 26.9 18.2 9.5

Total with automated using vendor 257 157 74 26 35 222

100.0 100.0 100.0 100.0 100.0 100.0

What was the original term of the vendor contract?

0-2 years 77 35 32 10 6 71

29.8 22.0 43.5 38.5 16.4 31.9

2-4 years 131 88 35 8 11 120

51.2 56.1 47.8 30.8 31.8 54.3

4-6 years 38 27 5 6 15 23

14.7 17.1 6.5 23.1 40.9 10.4

More than 6 years 11 8 2 2 4 7

4.4 4.9 2.2 7.7 10.8 3.4

Total with automated using vendor 257 157 74 26 35 222

100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s):

Number of banks with automated overdraft programs that do not use vendors216 96 64 56 64 152

Percent of study population 45.6 37.9 46.5 67.5 63.7 40.7

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VII. The Role of Vendors and Third Parties in Overdraft Practices 

and institutions with promoted programs were more likely to have standardized programs. Most small 

banks that used vendors purchased standardized programs (75.6 percent), compared with 53.8 percent of 

large banks. Also, two-thirds of institutions with promoted programs that reported using a vendor had 

standardized programs (66.2 percent), compared with 42.6 percent of institutions with nonpromoted 

programs.

VII.2. Vendor Compensation Structure

With regard to vendor compensation, most institutions in the study that operated automated overdraft 

programs (70.6 percent) paid vendors a percentage of the income or fees generated by the overdraft 

product purchased (see Table VII-4). The smaller the institution in terms of assets, the more likely this 

compensation structure was adopted (78.0 percent of small institutions, 67.4 percent of medium institutions, and 34.6 percent of large institutions). Study population banks with promoted programs were also 

considerably more likely than institutions with nonpromoted programs to compensate vendors this way 

(77.7 percent versus 26.2 percent).

Study population banks with automated overdraft programs that batch processed transactions from largest to smallest were less likely than those that used other batch-processing methods to pay vendors a 

percentage of income or fees earned; 56.3 percent of those that processed the largest transactions first 

compensated vendors in this way, in contrast to 81.2 percent of institutions that processed the smallest 

transactions first.

Of the institutions in the study that compensated vendors based on a percentage of income or fees 

generated by the overdraft product, nearly half (44.7 percent) paid vendors between 10 and 19 percent. 

However, compensation percentages between study population banks with promoted and nonpromoted 

programs differed substantially. Although relatively few institutions with nonpromoted programs paid 

vendors a percentage of income or fees, the percentages paid were much higher than those paid by institutions with promoted programs. Eighty-three percent of institutions with nonpromoted automated 

programs paid vendors 20 percent or more of income or fees generated, and 41.4 percent paid more than 

30 percent. By comparison, only one-third of surveyed banks with promoted automated programs paid 

vendors in excess of 20 percent.

Table VII-3

Type of Vendor Program Used for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of Automated 

Program

If your institution used a vendor, 

describe the vendor program? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater than 

$1 Billion

Nonpromoted Promoted

Standardized or off-the-shelf 162 119 29 14 15 147

62.9 75.6 39.1 53.8 42.6 66.2

Customized for the institution 93 38 45 10 19 74

36.3 24.4 60.9 38.5 54.5 33.4

Other 2 0 0 2 1 1

0.8 0.0 0.0 7.7 2.8 0.5

Total with automated using vendors

257 157 74 26 35 222

100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s):

Number of banks with automated overdraft programs that do not use vendors216 96 64 56 64 152

Percent of study population 45.6 37.9 46.5 67.5 63.7 40.7

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VII. The Role of Vendors and Third Parties in Overdraft Practices 

Table VII-4

Vendor Compensation for Automated Overdraft Programs

Number of Study Population Banksa

Percent of Column Total By Asset Size

By Type of 

Automated 

Program By Processing Method

Did your institution’s vendor 

receive a percentage of the 

income generated by the overdraft 

program? All

Less than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than 

$1 Billion

Nonpromoted Promoted

LargesttoSmallest

Not Size 

Related

SmallesttoLargest

Yes 181 123 50 9 9 172 37 72 72

70.6 78.1 67.4 34.6 26.2 77.7 56.3 70.6 81.2

No 76 35 24 17 26 49 29 30 17

29.4 22.0 32.6 65.4 73.8 22.3 43.7 29.4 18.8

Total with automated using vendor 257 157 74 26 35 222 66 102 89

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

If yes, what share of fees was the vendor paid in 2006?

0% 14 12 2 1 0 14 0 13 1

7.8 9.4 3.2 11.1 0.0 8.2 0.0 18.2 1.4

1-9% 21 8 11 2 0 21 4 12 5

11.5 6.2 22.6 22.2 0.0 12.1 10.3 16.2 7.5

10-14% 33 23 8 2 0 33 0 11 22

18.2 18.8 16.1 22.2 0.0 19.2 0.0 15.7 30.1

15-19% 48 27 19 2 2 46 13 14 21

26.5 21.9 38.7 22.2 17.3 27.0 34.6 19.6 29.2

20-29% 35 27 6 2 4 31 13 10 12

19.4 21.9 12.9 22.2 41.4 18.3 36.2 14.3 15.9

30% or more 30 27 3 0 4 26 7 12 12

16.6 21.9 6.5 0.0 41.4 15.2 18.9 16.0 15.9

Total with automated using 

vendors and paying share of fees

181 123 50 9 9 172 37 72 72

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Did the compensation depend on a minimum level of usage by customers? 

Yes 113 84 24 5 5 108 27 50 36

44.1 53.7 32.6 19.2 15.4 48.7 40.8 49.1 41.0

No 144 73 50 21 30 114 39 52 53

55.9 46.3 67.4 80.8 84.6 51.3 59.2 50.9 59.1

Total with automated using 

vendors

257 157 74 26 35 222 66 102 89

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Did the compensation depend on program features? 

Yes 1 0 0 1 0 1 0 1 0

0.4 0.0 0.0 3.8 0.0 0.5 0.0 1.0 0.0

No 256 157 74 25 35 221 66 101 89

99.6 100.0 100.0 96.2 100.0 99.5 100.0 99.0 100.0

Total with automated using 

vendors

257 157 74 26 35 222 66 102 89

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo item(s):

Number of banks with automated 

overdraft programs that do not 

use vendors

216 96 64 56 64 152 97 65 54

Percent of study population 45.6 37.9 46.5 67.5 63.7 40.7 59.0 39.1 37.8

a

 Figures do not always reconcile to totals due to the rounding of survey institutions weighted to represent the population.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

Comparing size groups, small banks compensated vendors with a greater percentage of income or fees 

than large banks. For example, more than one in five banks in the smallest group (21.9 percent) paid 

their vendors 30.0 percent or more of the income or fees generated by the automated program 

purchased, but none of the large banks paid such a high percentage.

Among study population banks that compensated vendors based on a proportion of overdraft-generated 

income, 44.1 percent structured vendor compensation on a minimum level of overdraft customer usage. 

This practice was more common among small institutions (53.7 percent, compared with 32.6 percent of 

medium institutions and 19.2 percent of large institutions). Forty-nine percent of institutions with 

promoted programs structured compensation in this way, compared with 15.4 percent of institutions with 

nonpromoted programs. Almost no banks (less than 1 percent) made vendor compensation dependent 

on program features.

VII.3. Summary

More than half (54.2 percent) of the study population banks that operated automated overdraft programs 

relied on third-party vendors to implement or manage the overdraft programs. Survey results show that 

the use of vendors to implement and manage promoted and nonpromoted automated overdraft programs 

has grown in recent years. Close to 90 percent of institutions using vendor-supplied automated overdraft 

programs began using them in the six years before the survey, and 70.2 percent started working with a 

vendor within the four years before the survey.

Almost two-thirds (62.9 percent) of study population banks that purchased automated overdraft 

programs from a vendor used standardized (or off-the-shelf) programs. Most study population banks that 

used a vendor to manage automated programs (70.6 percent) reported paying third-party vendors a 

percentage of the fees or income generated by the program, typically 10 to 20 percent.

Small banks and institutions with promoted programs were more likely than other banks to rely on thirdparty vendors to implement and manage the automated overdraft program; purchase and implement a 

standardized overdraft program; structure vendor compensation based on a percentage of overdraft 

income generated; and make vendor compensation contingent on a minimum level of income or fees 

being generated by the use of the product. When institutions with nonpromoted programs paid vendors a 

percentage of income or fees earned, compensation percentages were much higher than those paid by 

institutions with promoted programs.

VIII. Growth and Profitability of Overdraft 

Programs: The Importance of NSF-Related 

Fee Income for Bank Earnings

The survey asked banks to provide estimates of annual fee income related to the processing of NSF items 

for 2005, 2006, and if available, for the years 2002–2004. The survey collected reasonable estimates of 

NSF-related fee income earned in 2006 for about 99 percent of study population banks. Banks representing roughly two-thirds (794 banks) of the study population reported the full five years of data requested 

on annual NSF-related fee income.31

31 The survey instrument also asked for the breakdown of annual NSF-related fees into components measuring income related 

to items that were paid versus income related to items that were returned as unpaid. A much smaller number of respondents were 

able to provide the breakdown of NSF-related income into fees associated with paid NSF items versus fees associated with 

returned NSF items. Banks representing less than one-fourth of the study population were able to provide this fee breakdown for 

2006, and banks representing less than one-tenth of the study population were able to provide the breakdown back to 2002.
FDIC Study of Bank Overdraft Pogams  n  November

Two types of ratios were used to evaluate the importance of overdraft programs for bank earnings: ratios 

that compare NSF-related fee income to other measures of income (income share ratios) and ratios that 

measure the flow in fee income relative to the deposit balances that generate the fees (quasi-profitability 

ratios).32 The income share ratios compare NSF-related fee income to three income measures reported in 

bank Call Reports: (1) service charges on deposit accounts; (2) total noninterest income; and (3) net 

operating revenue, which equals the sum of net interest income and total noninterest income.33 The 

quasi-profitability ratios compare NSF-related income to the volume of deposit dollars reported in bank 

Call Reports:34 (1) total demand deposits; (2) total transaction deposits, which include NOW accounts; 

and (3) deposit balances held in MMD accounts plus total transaction deposits.35

VIII.1. Income Share Results

Banks in the study population that reported fee-income data are estimated to have earned $1.97 billion 

in NSF-related fees in 2006, representing 74.0 percent of the $2.66 billion in service charges on deposit 

accounts reported by these banks in their Call Reports (see Table VIII-1).36 The share was somewhat 

lower for large banks (72.6 percent) than for small and medium banks (79.5 percent and 78.1 percent, 

respectively). For study population banks with automated overdraft programs, NSF-related fee income 

accounted for a larger share of total service charges on deposit accounts (74.4 percent) compared with 

banks that operated only linked-account and overdraft LOC programs (69.4 percent). Study population 

banks that operated automated overdraft programs earned $1.77 billion in NSF fees in 2006, which 

represented 90.0 percent of total NSF-related fee-income earnings estimated for the entire study population. Among banks with automated overdraft programs, NSF-related fees made up a larger share of total 

service charges on deposit accounts for banks whose programs covered ATM and POS/debit transactions (75.0 percent) than for the smaller number of institutions whose programs did not (63.8 percent). 

For banks having no formal programs, NSF-related fees made up 76.8 percent of Call Report depositaccount fees.

NSF-related fee income accounted for 24.8 percent of the total noninterest income earned in 2006 by 

study population banks. The share was lower for large banks, since more complex banks tended to have 

more sources of noninterest income. Among study population banks that had automated overdraft 

programs, the share of noninterest income attributable to NSF-related fees was higher for banks that 

covered ATM and POS/debit transactions (25.4 percent), than for banks whose automated overdraft 

programs did not cover these transactions (20.9 percent). NSF-related fees accounted for the largest 

shares of noninterest income for banks having no formal overdraft programs (29.5 percent) and for institutions that batch processed smallest-to-largest (28.4 percent), but smaller institutions are disproportionately represented among these groups of banks.

For all study population banks reporting fee income, NSF-related fee income accounted for 5.9 percent 

of net operating revenues, which includes noninterest income as well as the net interest income earned 

on bank assets. This share did not vary by much across the asset-size groups. However, NSF-related fees 

32 Because of different factors that can affect the fee income earned by banks (such as market conditions and customer or 

account characteristics), fee-income patterns reported in this study should be interpreted with caution. In addition, the fee-income 

data reflected in the survey results reflects only FDIC-supervised institutions and cannot be generalized to broader bank 

populations.

33 It is important to note that the latter two Call Report income items can be negative numbers (for example, because of trading 

losses).

34 As noted, the survey did not collect information on the actual accounts covered by overdraft programs. Hence, the quasiprofitability measures were constructed using Call Report items measuring total outstanding deposit balances (held in domestic 

offices) for broad types of accounts: demand deposit, NOW accounts, and MMD accounts. These balance sheet items include 

accounts held by all types of account holders (consumers and businesses), which can be covered by different types of overdraft 

programs.

35 Deposit data used in the ratios are measured as annual average outstanding, where the beginning-of-year balances are 

merger adjusted to include data for banks that were acquired during the calendar year.

36 Estimates of Call Report items for the study population were generated by weighting actual Call Report data for the sample of 

reporting banks to be consistent with population estimates of the NSF-related fee income. 

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs
FDIC Study of Bank Overdraft Pogams  n  November 2008 57 Table VIII-1 NSF-Related Fee Income as a Share of Broader Income Measures Aggregate Ratios (Percent) and Dollar Aggregates ($ Millions)a By Asset Size By Programs Offered By Presence of Automated Program and Transactions Covered By Processing Method All Less thn $250  Million $250 Million to Less than $1 Billion Greater than $1 Billion Has Auto- mated Program Only Linked or LOC No Formal Program Has Automated Program: Covers ATM or POS/Debit Has Automated Program: Does Not Cover ATM or POS/Debit Largest- to- Smallest Not Size Related Smallest- to- Largest Ratio of NSF-related fee income to: Fees on deposit account 74.0 79.5 78.1 72.6 74.4 69.4 76.8 75.0 63.8 74.4 74.4 70.5 Noninterest income 24.8 34.7 35.3 22.7 25.1 21.0 29.5 25.4 20.9 24.1 25.8 28.4 Net operating revenue 5.9 5.7 5.7 6.0 6.7 2.7 3.9 7.1 3.4 6.8 4.9 4.0 Net operating income 21.2 25.1 22.1 20.6 24.3 9.4 14.4 25.9 10.8 23.9 18.1 14.7 Ratio of Call Report service charge fees on deposit accounts to: Fees on deposit account 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Noninterest income 33.5 43.6 45.2 31.3 33.8 30.2 38.4 33.9 32.7 32.3 34.7 40.3 Net operating revenue 8.0 7.2 7.3 8.2 9.0 3.9 5.1 9.4 5.4 9.1 6.6 5.6 Net operating income 28.7 31.6 28.4 28.4 32.6 13.5 18.7 34.6 16.9 32.2 24.3 20.8 Memo items(s): 2006 income ($ Millions) NSF-related fee income 1,966.4 207.2 266.6 1,492.5 1,768.8 163.4 34.1 1,681.5 87.3 1,401.9 338.4 226.1 Fees on deposit account 2,659.0 260.8 341.6 2,056.7 2,379.0 235.6 44.4 2,242.2 136.8 1,883.7 454.6 320.7 Noninterest income 7,932.3 597.6 755.6 6,579.1 7,036.4 780.1 115.8 6,618.0 418.3 5,826.1 1,310.9 795.4 Net operating revenue 33,306.8 3,621.6 4,663.3 25,021.9 26,398.5 6,029.8 878.5 23,846.6 2,552.0 20,722.6 6,898.2 5,686.1 Net operating income 9,271.0 824.3 1,204.2 7,242.6 7,294.0 1,739.6 237.4 6,484.4 809.7 5,856.0 1,872.3 1,542.7 Total banks reporting fee income 1157 843 208 105 471 529 157 402 69 28

a This includes fee income for paid overdrafted items, for returned overdrafted items, from initiation fees, and from maintenance fees.

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

Table VIII-2

NSF-Related Fee Income as a Share of Broader Income Measures by Quartiles

Bank-Level Ratios (percent)* By Asset Size By Programs Offered

By Presence of Automated 

Program and Transactions 

Covered By Processing Method

All

Less than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than $1 

Billion

Has 

Automated 

Program

Only 

Linked or 

LOC

No 

Formal 

Program

Has 

Automated 

Program: 

Covers 

ATM or 

POS/Debit

Has 

Automated 

Program: 

Does Not 

Cover 

ATM or 

POS/Debit

LargesttoSmallest Not Size Related Smallest- to- Largest

NSF-related fee income share of Fees on deposit account25th percentile 67.3 70.1 65.3 55.4 69.1 63.5 71.4 70.7 60.1 67.8 64.4 69.8

median 79.8 80.8 79.3 71.6 80.9 77.0 84.5 81.5 74.4 78.1 80.8 80.3

75th percentile 90.4 92.2 88.0 87.2 89.6 90.1 94.3 89.1 90.9 89.6 87.4 93.4

Noninterest income25th percentile 25.8 31.4 22.9 15.2 27.9 21.3 37.5 28.4 19.6 24.1 21.1 30.4

median 43.3 47.2 36.3 27.1 42.7 42.0 56.5 42.7 41.7 41.9 37.6 47.0

75th percentile 57.3 59.9 48.4 40.0 55.0 54.8 66.7 55.0 49.2 54.3 55.0 59.9

Net operating revenue25th percentile 3.1 3.6 2.5 2.3 4.2 2.3 4.2 4.6 3.0 2.8 3.1 3.5

median 5.4 5.7 4.6 4.4 6.6 4.2 6.4 7.3 4.4 5.4 5.7 5.4

75th percentile 8.3 8.5 7.7 7.5 9.9 6.5 8.3 10.3 5.1 8.7 8.3 7.9

Net operating income25th percentile 10.6 11.8 8.6 7.4 17.2 7.8 11.8 19.0 8.5 11.1 10.0 9.7

median 22.1 22.5 20.1 18.8 28.2 18.3 22.3 32.6 19.0 21.5 23.6 20.7

75th percentile 41.2 44.8 36.3 27.9 50.2 33.2 35.5 51.1 35.1 40.8 44.0 38.3

Call Report deposit fee income as share of :Noninterest income25th percentile 37.0 40.4 32.3 24.9 36.6 33.1 50.4 37.0 35.7 37.4 32.6 38.7

median 53.6 59.6 47.7 37.9 51.1 51.2 68.9 51.0 53.1 55.1 48.7 55.9

75th percentile 70.4 73.2 63.2 50.5 69.7 68.3 79.0 70.1 66.2 70.4 69.1 71.2

Net operating revenue25th percentile 4.0 4.6 3.5 3.8 5.9 3.0 6.0 6.3 4.0 4.2 4.7 3.9

median 7.0 7.1 6.6 6.5 8.6 5.6 7.8 8.8 6.6 7.5 6.8 6.8

75th percentile 10.4 10.6 9.5 10.0 12.3 7.9 10.9 12.6 9.2 11.7 10.3 9.6

Net operating income25th percentile 14.9 15.5 11.8 12.7 22.9 9.6 17.8 24.7 14.6 17.6 16.5 13.3

median 28.4 28.6 28.7 25.0 37.7 21.7 28.9 41.1 24.3 30.1 31.3 27.0

75th percentile 50.9 53.3 44.6 37.5 58.7 39.0 47.9 64.9 52.4 46.7 54.7 49.5Total banks reporting 2006 NSFrelated fee income 1157 844 209 105 471 529 157 402 69 287 322 547* This includes fee income for paid overdrafted items, for returned overdrafted items, from initiation fees, and from maintenance fees.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

as a share of net operating revenue were notably higher for study population banks with automated overdraft programs (6.7 percent) compared with banks with linked-account and overdraft LOC only (2.7 

percent), and compared with banks with no formal overdraft program (3.9 percent). Among banks that 

had automated overdraft programs, NSF-related fee income accounted for a higher share of net operating revenue for banks whose programs covered ATM and POS/debit transactions (7.1 percent, compared 

with 3.4 percent for banks whose automated overdraft programs did not cover these transactions). NSFrelated fees also were a larger share of operating revenue for banks that batch processed items largest-tosmallest (6.8 percent; see Table VIII-1). Similar patterns are evident for the ratio of NSF-related fees to 

net operating income, which equals net operating revenue less noninterest expenses.

As a validity check, it is useful to compare patterns evident for NSF-related fee-income ratios with those 

found in ratios that measure the importance of total service charges on deposit accounts for broader 

income flows, as estimated for the study population of banks. The deposit-service-charges to income ratios 

exhibit generally comparable qualitative patterns across groups of study population banks classified by size, 

type of overdraft program(s), transactions covered, and batch-processing method (see Table VIII-1).

A summary of quartile values for bank-level ratios indicates that NSF-related fee income tended to 

account for a larger share of net operating revenues and net operating income for banks that had automated overdraft programs, compared with those that operated other overdraft programs (see Table 

VIII-2).37 However, the quartile values also show a notable variation in fee-income ratios across banks 

within the particular groups examined in this study. Thus, aggregate ratios evident for a group are not an 

accurate representation for all banks in the group.

VIII.2. Fee Income as Shares of Deposits

Income shares may indicate little about the overall volume of income generated by NSF-related activity.38 In contrast, the quasi-profitability ratios presented in this section measure the amount of NSFrelated fee income accrued on a per-deposit-dollar basis. Thus, a higher ratio implies a larger flow of 

income as a share of the deposits from which fees are generated. For the study population as a whole, 

NSF-related fee income in 2006 equaled 4.2 percent of the average outstanding demand-deposit balances 

and 2.7 percent of average transaction-account balances (see Table VIII-3). For both deposit measures, 

larger banks had higher fee income per average dollar of deposits. For the broader measure of deposits 

that included MMDs, NSF-related fees equaled 85 basis points of average deposit balances, and there 

was less variation across the size groups.

As reported in Table VIII-3, NSF-related-fee income-to-deposit ratios were higher for banks that operated automated overdraft programs. For banks with automated programs, NSF-related fees reported for 

2006 were 5.2 percent of average demand deposits and 3.4 percent of average transaction-account 

balances; for banks having linked-account and overdraft LOC programs only, these ratios were 1.5 

percent and 0.9 percent, respectively. For banks having no formal programs, NSF-related fees equaled 

1.5 percent of demand deposit balances and 0.9 percent of transaction-account balances. Among study 

population banks that operated automated overdraft programs, NSF-related fees per dollar of deposits 

were also higher for those whose programs covered ATM or POS/debit transactions than for institutions 

whose programs did not (5.6 percent and 3.6 percent for demand deposits and transaction deposits, 

respectively, versus 2.4 percent and 1.7 percent for banks whose automated programs did not cover 

ATM or POS/debit transactions). Study population banks that batch processed transactions largest-tosmallest had a higher fee-to-deposit ratio than banks that batch processed smallest-to-largest or banks 

that did not batch process by size. As with the income-share measures, the ratios of total service charges 

on deposit accounts to deposit account balances, estimated for the study population of banks, exhibited 

37 It is important to also examine central tendencies in bank-level ratios since larger institutions (in this case, institutions reporting more income) are given greater weight in the construction of cohort-level aggregates.

38 For example, when a broader income measure becomes negative because of losses, the fee-income share ratio is not 

meaningful. 
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs Table VIII-3 NSF-Related Fee Income Ratios to Deposits Outstanding Aggregate Ratios (Percent) and Dollar Aggregates ($ Millions)a By Asset Size By Programs Offered By Presence of Automated Program and Transactions Covered By Processing Method All Less than $250 Million $250 Million to Less than $1 Billion Greater than $1 Billion Has Auto- mated Program Only Linked or LOC No Formal Program Has Automated Program: Covers ATM or POS/Debit Has Automated Program: Does Not Cover ATM or POS/Debit Largest- to- Smallest Not Size Related Smallest- to- Largest Ratio of NSF-related fee income to: Demand deposits 4.17 2.00 3.13 5.27 5.23 1.48 1.46 5.57 2.41 5.73 3.14 1.89 Transaction deposits 2.69 1.11 1.90 3.69 3.40 0.94 0.92 3.58 1.72 3.79 1.98 1.19 Trans. and MMD deposits 0.85 0.72 0.89 0.86 0.95 0.42 0.60 1.00 0.47 0.98 0.71 0.54 Ratio of Call Report service charge fees on deposit accounts to: Demand deposits 5.63 2.52 4.02 7.26 7.04 2.13 1.90 7.43 3.78 7.69 4.22 2.69 Transaction deposits 3.64 1.40 2.43 5.08 4.57 1.36 1.20 4.77 2.69 5.09 2.66 1.69 Trans. and MMD deposits 1.15 0.91 1.14 1.19 1.27 0.60 0.79 1.33 0.74 1.32 0.95 0.77 Memo items(s): Year-end 2006 Deposits ($ Millions) Demand deposits 45,801.2 10,474.3 7,941.7 27,385.2 32,665.2 10,911.9 2,224.0 29,482.1 3,183.1 23,759.5 10,237.5 11,804.2 Transaction deposits 70,309.7 18,658.0 13,015.3 38,636.4 49,992.5 16,800.2 3,517.0 45,575.6 4,416.8 35,463.1 16,450.6 18,396.0 Trans. and MMD deposits 232,926.7 28,863.4 30,032.0 174,031.3 188,336.6 39,157.5 5,432.6 169,632.3 18,704.3 143,915.9 47,034.6 41,976.3 NSF-related fee income ($ millions 2006) 1,966.4 207.2 266.6 1,492.5 1,768.8 163.4 34.1 1,681.5 87.3 1,401.9 338.4 226.1 Total banks reporting fee income 1157 843 208 105 471 529 157 402 69 287 322 548 a This includes fee income for paid overdrafted items, for returned overdrafted items, from initiation fees, and from maintenance fees. Fee income is measured as a ratio to average deposit balances, where beginning of period deposits are calculated on a merger adjusted basi
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

qualitatively similar patterns across groups of banks classified by size, type of overdraft program(s), transactions covered, and batch-processing method (see Table VIII-3).

Analysis of bank-level quasi-profitability ratios by quartile shows that median fee-income profitability 

ratios also tended to be higher for banks that operated automated overdraft programs. However, median 

ratios were notably lower than the aggregate measures for the whole population discussed above.39 The 

median bank-level ratio of NSF-related fees to transaction deposits was only 1.1 percent, compared with 

the ratio of 2.7 percent as calculated for the aggregate study population. This result reflects the large 

proportion of smaller banks in the population and the relationship between NSF-related fee income and 

bank size: Median NSF-related fee income-to-deposit ratios tended to be higher for larger banks. The 

analysis also revealed a fair amount of variation in bank-level ratios measuring NSF-related fees per 

dollar of deposits for 2006. For instance, 25.0 percent of the banks had NSF fee-to-transaction-deposit 

ratios of more than 1.9 percent, and 25.0 percent had ratios of 0.7 percent or less (see Table VIII-4).

39 This result reflects the higher ratios for large banks. 

Table VIII-4

NSF-Related Fee Income Ratios to Deposits Outstanding by Quartiles

Bank-Level Ratios (Percent)a By Asset Size By Programs Offered

All

Less than 

$250 

Million

$250 

Million to 

Less than 

$1 Billion

Greater 

than 

$1 Billion

Has 

Automated 

Program

Only 

Linked or 

LOC

No Formal 

Program

NSF-related fee income share of 

Demand deposits 

25th percentile 1.31 1.31 1.22 1.94 1.99 0.86 1.35 

median 2.10 2.04 2.42 3.47 3.23 1.66 1.80 

75th percentile 3.65 3.27 5.50 6.01 5.03 2.47 3.15 

Transaction deposits

25th percentile 0.69 0.67 0.74 1.19 1.04 0.54 0.76 

median 1.14 1.05 1.37 2.44 1.70 0.85 1.08 

75th percentile 1.93 1.64 2.53 3.94 2.62 1.33 1.70 

Trans. and MMD deposits

25th percentile 0.42 0.46 0.34 0.33 0.56 0.32 0.61 

median 0.76 0.76 0.68 0.77 1.05 0.57 0.88 

75th percentile 1.27 1.25 1.30 1.28 1.53 0.94 1.48 

Call Report service charges on deposit accounts:

Demand deposits 

25th percentile 1.71 1.62 1.80 3.02 2.67 1.23 1.73 

median 2.85 2.57 3.52 5.09 4.03 2.15 2.50 

75th percentile 4.55 4.03 6.50 8.36 6.05 3.30 4.08 

Transaction deposits

25th percentile 0.95 0.88 1.07 1.89 1.39 0.72 0.98 

median 1.50 1.36 2.07 3.31 2.26 1.09 1.37 

75th percentile 2.44 2.03 3.44 5.10 3.17 1.72 2.31 

Trans. and MMD deposits

25th percentile 0.58 0.59 0.53 0.62 0.77 0.42 0.79 

median 0.96 0.97 0.93 0.99 1.36 0.74 1.02 

75th percentile 1.57 1.55 1.78 1.75 1.95 1.19 2.01 

Total banks reporting 2006 NSF-related 

fee income

1157 843 209 105 471 529 157

a

 This includes fee income for paid overdrafted items, for returned overdrafted items, from initiation fees, and from maintenance fees.

Fee income is measured as a ratio to average deposit balances, where beginning of period deposits are calculated on a merger adjusted basis.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

VIII.3. Charged-Off and Restructured Accounts

The survey also asked banks to provide estimates of the annual number and dollar value of deposit 

accounts that were charged off or restructured during calendar year 2006. The survey collected reasonable estimates of charged-off and restructured accounts for banks representing almost 98 percent of the 

study population banks, but only 73.0 percent of year-end domestic deposit dollars estimated for the 

study population in 2006. This disparity is driven by the fact that a number of large institutions did not 

provide this information.

Banks in the study population reporting these data are estimated to have charged off 401,000 accounts 

totaling $124.2 million or an average negative balance charged off of around $310 per account. While 

this average balance did not vary across bank-size groups, it was somewhat higher for banks that operated 

automated overdraft programs ($312.00), particularly for those programs that covered ATM or POS/

debit transactions ($322.40 if the automated program covered ATM or POS/debit transactions versus 

$201.40 if ATM or POS/debit transactions were not covered) (see Table VIII-5).

Call Reports include deposit account charge-offs under the “residual charge-offs not elsewhere classified 

(n.e.c.)” items.40 Charged-off deposit account dollars reported by study population banks represented 

32.9 percent of $377.1 million of gross charge-offs n.e.c., and 12.6 percent of total gross loan and lease 

charge-offs reported by these banks in 2006 Call Reports.41 Deposit account charge-offs accounted for a 

larger share of Call Report charge-offs for banks that operated an automated overdraft program (particularly for those having programs that covered ATM and POS/debit transactions) and for banks that batch 

processed transactions largest-to-smallest. For study population banks with automated overdraft 

programs, account charge-offs equaled 35.8 percent of gross charge-offs n.e.c., compared with 12.8 

percent for banks that operated only linked-account programs, overdraft LOC programs, or both, and 

17.7 percent for banks having no formal program.

Reported charged-off accounts equaled less than one-fifth of a percent (18 basis points) of average transaction deposits outstanding. Again, the ratio of account charge-offs to transaction-account balances was 

higher for banks operating automated overdraft programs, particularly those that covered ATM or 

POS/debit transactions and for banks that batch processed starting with the largest transaction. Reporting study population banks that operated automated programs are estimated to have charged off more 

than 375,000 accounts having negative balances equaling $117.3 million in 2006. These charge-offs 

represented 94.4 percent of the dollar volume of accounts charged off by the study population reporting 

these data.

Reporting study population banks restructured 15,600 accounts with negative balances totaling $9.8 

million, or an average of $624 per restructured account. The average size of restructured accounts was 

higher for smaller banks ($722 for small banks versus $576 for large banks). Banks that operated automated overdraft programs accounted for the vast majority (96 percent) of reported restructured accounts 

(15,000 accounts) and had an average of $572 per restructured account. Restructured account balances 

equaled less than 2 basis points measured as a share of average transaction-account balances in 2006.

40 Charged-off accounts are classified as a loan charge-off in bank Call Reports. Deposit account charge-offs are not a specific 

category in the Call Report; rather they are included in two residual charge-off categories where banks report other consumer 

loans charged off that are n.e.c. or other (nonconsumer) loans charged off that are n.e.c. Because the survey did not collect separate information on consumer account charge-offs and other account charge-offs, the two Call Report items were aggregated to 

measure charge-offs n.e.c.

41 Estimates of Call Report items for the study population were generated by weighting actual Call Report data for the sample of 

reporting banks to be consistent with population estimates of the deposit account charge-offs.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

Table VIII-5

Charged-Off and Restructured Deposit Accounts in 2006

Aggregate Ratios (Percent)Dollar Aggregates ($ Millions) By Asset Size By Programs Offered

By Presence of Automated 

Program and Transactions 

Covered By Processing Method

All

Less than 

$250 

Million

$250 

Million 

to Less 

than $1 

Billion

Greater 

than $1 

Billion

Has 

Automated 

Program

Only 

Linked or 

LOC

No 

Formal 

Program

Has 

Automated 

Program: 

Covers 

ATM or 

POS/Debit

Has 

Automated 

Program: 

Does Not 

Cover 

ATM or 

POS/Debit

LargesttoSmallest Not Size Related Smallest- to- Largest

Volume of overdrafted account balances charged off as percent of :

Gross charge-off on other consumer and other loans n.e.c.

32.9 23.8 33.4 34.3 35.8 12.8 17.7 36.6 26.5 37.0 30.1 18.9

Gross charge-offs on all loans and leases

12.6 8.2 10.8 13.8 14.3 3.7 5.6 14.8 9.4 15.3 10.6 5.9

Average transactions deposits 0.18 0.06 0.13 0.27 0.25 0.03 0.05 0.26 0.13 0.28 0.13 0.06

Volume of overdrafted account balances restructured as percent of: NSF-related fee income 0.67 1.00 1.61 0.37 0.68 0.49 1.12 0.70 0.42 0.58 0.59 1.15

Average transactions deposits 0.014 0.011 0.030 0.010 0.018 0.005 0.010 0.020 0.007 0.016 0.012 0.014

Dollar volume ($ Millions)Volume of overdrafted account balances charged off

124.2 10.7 17.4 96.0 117.3 5.1 1.8 110.8 6.5 92.0 21.3 10.9

Overdraft drafted accounts restructured

9.8 2.1 4.0 3.7 8.6 0.8 0.4 8.2 0.4 5.3 1.9 2.5

NSF-related fee income 1,462.8 207.2 246.4 1,009.2 1,266.5 162.2 34.1 1,179.7 86.8 918.9 324.1 219.7

Services charges on deposit accounts

1,927.2 260.8 307.0 1,359.4 1,650.1 232.7 44.4 1,521.5 128.6 1,182.5 438.2 306.5

Gross charge-off on other consumer and other loans nec

377.1 45.1 52.2 279.8 327.3 39.4 10.4 302.8 24.5 249.0 70.8 57.4

Gross charge-offs on all loans and 

leases

986.8 130.8 161.0 695.0 819.0 135.1 32.7 750.1 69.0 600.4 201.7 184.7

Transaction deposits year-end 2006 65,100.2 18,658.0 12,239.1 34,203.2 45,130.6 16,452.6 3,517.0 40,783.5 4,347.1 31,219.3 15,955.3 17,925.6

Memo item(s):Number of accounts charged off (thousands)

401.0 35.3 55.7 310.1 375.9 18.4 6.8 343.6 32.3 293.5 71.3 36.2

Average amount charged off ($s) 309.6 304.4 312.6 309.7 312.0 274.6 273.0 322.4 201.4 313.5 298.7 300.1

Number of accounts restructured (thousands)

15.6 2.9 6.3 6.5 15.0 0.3 0.4 14.4 0.6 8.7 3.3 3.6

Average size of restructured account ($s)

623.8 722.0 628.2 575.6 572.4 2775.3 1037.1 571.3 596.9 607.3 584.9 698.5

Other consumer and other 

charge-offs as a share of total loan 

charge-offs (percent)

38.2 34.5 32.4 40.3 40.0 29.2 31.9 40.4 35.5 41.5 35.1 31.1

Total banks reporting fee income 

and account charge-off data 

1,142 843 200 98 457 528 157 389 68 279 320 544
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs Table VIII-6 Net NSF-Related Fee Income Ratios Aggregate Ratios (Percent) Dollar Aggregates ($ Millions) By Asset Size By Programs Offered By Presence of Automated Program and Transactions Covered By Processing Method All Less than $250 Million $250 Million to Less than $1 Billion Greater than $1 Billion Has Auto- mated Program Only Linked or LOC No Formal Program Has Automated Program: Covers ATM or POS/Debit Has Automated Program: Does Not Cover ATM or POS/Debit Largest- to- Smallest Not Size Related Smallest- to- Largest Volume of overdrafted account balances charged off as percent of: NSF-related fee income 8.49 5.18 7.07 9.52 9.26 3.11 5.40 9.39 7.50 10.01 6.57 4.94 Services charges on deposit accounts 6.44 4.12 5.67 7.06 7.11 2.17 4.15 7.28 5.06 7.78 4.86 3.54 NSF-related fee income net of accounts charged off as a percent of: Service charges on deposit accounts 69.5 75.3 74.6 67.2 69.6 67.5 72.7 70.3 62.4 69.9 69.1 68.1 Net noninterest income 25.0 32.9 32.3 22.6 25.7 20.8 27.9 26.3 19.8 25.0 23.9 27.2 Net operating revenue 5.12 5.43 5.13 5.06 5.95 2.65 3.67 6.36 3.20 5.99 4.48 3.75 Average demand deposits 3.04 1.90 2.89 3.55 3.72 1.45 1.38 3.91 2.30 3.75 2.89 1.82 Average transactions deposits 1.99 1.06 1.74 2.56 2.46 0.93 0.87 2.56 1.64 2.56 1.82 1.14 Dollar volume ($ millions) Overdrafted account balances charged off 124.2 10.7 17.4 96.0 117.3 5.1 1.8 110.8 6.5 92.0 21.3 10.9 NSF-related fee income 1,462.8 207.2 246.4 1,009.2 1,266.5 162.2 34.1 1,179.7 86.8 918.9 324.1 219.7 Net NSF-related fee income 1,338.6 196.5 229.0 913.1 1,149.2 157.1 32.3 1,069.0 80.3 826.9 302.8 208.9 Services charges on deposit accounts 1,927.2 260.8 307.0 1,359.4 1,650.1 232.7 44.4 1,521.5 128.6 1,182.5 438.2 306.5 Net noninterest income 5,348.6 597.6 708.4 4,042.6 4,477.4 755.4 115.8 4,072.1 405.3 3,310.7 1,269.7 768.2 Net operating revenue 26,122.8 3,621.6 4,466.9 18,034.4 19,320.4 5,924.0 878.5 16,814.5 2,505.9 13,807.1 6,753.1 5,562.6 Demand deposits, year-end 2006 42,860.5 10,474.3 7,448.5 24,937.8 29,981.1 10,655.4 2,224.0 26,852.8 3,128.3 21,503.6 9,912.3 11,444.7 Transaction deposits year-end 2006 65,100.2 18,658.0 12,239.1 34,203.2 45,130.6 16,452.6 3,517.0 40,783.5 4,347.1 31,219.3 15,955.3 17,925.6 Memo item(s): Total banks reporting fee income and account charge-off data 1,142 843 200 98 457 528 157 389 68 279 320 54
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

VIII.4. Net Fee-Income Ratios

Table VIII-6 reports NSF-related fee-income measures that are adjusted to reflect charged-off account 

balances for the segment of the study population that reported charge-off information. Banks that 

reported these data had $1.46 billion in NSF-related fee income and account charge-offs that equaled 

8.5 percent of this income. Account charge-offs measured as a share of fee income were higher for banks 

in the larger asset-size groupings; for banks that had automated overdraft programs, particularly those 

that covered ATM and POS/debit transactions; and for banks that batch processed items largest-tosmallest (compared with other batch-processing methods). Similar patterns are evident for charge-offs 

measured relative to the Call Report item measuring service charges on deposit accounts.

Although their absolute levels were somewhat lower, NSF-related fee-income ratios that net out 

account charge-offs exhibited qualitatively similar patterns to the gross ratios examined in Sections 

VIII.1 and VIII.2. In particular, net NSF-related fees as a share of operating revenues varied little across 

the bank-size groups. However, net NSF-related fees as a share of net operating revenues were higher 

for banks that had automated overdraft programs (5.1 percent for all reporting banks versus 6.0 percent 

for reporting banks with automated programs), especially those covering ATM or POS/debit transactions (6.4 percent). In contrast, net NSF-income ratios were 2.7 percent for banks that operated only 

linked-account programs, overdraft LOC programs, or both, and 3.7 percent for banks with no formal 

overdraft program.

Net NSF-related fees measured relative to deposits were also higher for banks that operated automated 

overdraft programs (2.0 percent of transaction deposit dollars for all reporting banks versus 2.5 percent 

for reporting banks with automated programs), and particularly for those whose automated program 

covered ATM and POS/debit transactions (2.6 percent if ATM or POS/debit transactions were covered 

versus 1.6 percent if ATM and POS/debit transactions were not covered). In contrast, reporting banks 

with only linked account or overdraft LOCs (or both) had net NSF-related fee income equal to 93 basis 

points of transaction deposits, and reporting banks with no formal program had a net fee-income-todeposit ratio of 87 basis points. Thus, although banks that operated automated programs had higher 

account charge-offs, fee income measured net of these charge-offs also tended to represent a larger share 

of operating revenues and a higher percentage of transaction-account balances.

VIII.5. Trends in NSF-Related Fee Income

As noted above, five years of fee-income data were available for banks representing about two-thirds 

(794 banks) of the study population. This section summarizes trends in fee income for these institutions. 

For this purpose, the importance of NSF-related fees as a component of income is measured using the 

ratio of NSF-related fees to net operating revenues, and the profitability of programs generating NSFrelated fee income is measured relative to average outstanding transaction deposits.

As illustrated in Table VIII-7, there was a modest increase in NSF-related fee income as a share of net 

operating revenue among study population institutions represented by banks reporting fee income in the 

five-year period evaluated by the survey (from 5.5 percent in 2002 to 6.2 percent in 2006). The upward 

trend reflects increases evident for banks operating automated overdraft programs. For study population 

banks that had an automated overdraft program in place for the entire five-year period, NSF-related fee 

income increased to 7.3 percent of operating revenue in 2006, from 5.8 percent in 2002. These institutions 

tended to include larger banks that, as noted above, accounted for a disproportionate share of income estimated for the study population. In contrast, for banks that did not operate an automated program but had 

linked accounts or overdraft LOCs (or both) during the 2002–2006 period, the ratio of NSF-related fee 

income to net operating revenue declined to 2.7 percent in 2006, from 3.5 percent in 2002.

NSF-related fees measured as a percentage of average transaction deposits indicate similar patterns for 

banks reporting the fee-income trend data. For banks that had an automated program during the entire 

2002–2006 period, the ratio of NSF-related fees to transaction deposits increased from 2.7 percent in 
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

2002 to 3.4 percent in 2006; while the comparable ratio for banks that operated only linked accounts or 

overdraft LOCs (or both) edged down from 1.0 percent in 2002 to 0.9 percent in 2006. For study institutions that had no formal programs during 2002–2006, NSF-related fee income as a percentage of average 

transaction deposits was fairly flat. These institutions, which tended to be smaller, accounted for only 

about 2 percent of NSF-related fee income estimated for study population banks reporting complete feeincome trend data.

The analysis of bank-level trends in fee-income ratios, as reported in Table VIII-8, indicates less distinct 

trends in median ratios for banks that operated automated programs during the entire five-year period. 

At the same time, the median of both fee-income ratios increased for banks that adopted automated 

programs between 2002 and 2006. (The median ratio of fee income to operating revenue rose from 5.6 

percent in 2002 to 6.5 percent in 2006; the median ratio of fee income to transaction deposits rose from 

1.1 percent in 2002 to 1.7 percent in 2006.) However, because banks in this group were adopting 

programs at a fairly steady pace, these patterns do not measure the effect program adoption had on NSFrelated fee income.

Table VIII-7

Trends in NSF-Related Fee Income: 2002–2006

Aggregate Ratios (percent)a

Classified by Programs Offered All

By Year

2002 2003 2004 2005 2006

NSF-related fee income ratio to net operating revenue (percent

Has automated program 312 6 6.62 6.91 7.13 7.01

 Started program after 2001 212 6.24 6.96 7.27 7.38 6.72

 Had program in 2001 100 5.75 6.28 6.55 6.89 7.33

Offers linked or lines 380 3.38 3.13 2.89 2.67 2.66

 Started program(s) after 2001 17 2.15 2.85 2.57 2.05 1.65

 Had program(s) in 2001 363 3.45 3.14 2.9 2.71 2.73

No formal program 103 4.85 5.31 5.38 5.06 4.78

All banks reporting fee income trends 794 5.51 5.95 6.13 6.29 6.23

NSF-related fee income as percent of average transactions deposit

Has automated program 312 2.64 3.06 3.34 3.6 3.91

 Started program after 2001 212 2.62 3.30 3.98 4.18 4.58

 Had program in 2001 100 2.66 2.83 2.84 3.16 3.40

Offers linked or lines 380 0.99 0.95 0.93 0.84 0.87

 Started program(s) after 2001 17 0.61 0.77 0.74 0.64 0.54

 Had program(s) in 2001 363 1.02 0.97 0.94 0.86 0.89

No formal program 103 1.18 1.18 1.15 1.06 1.12

All banks reporting fee income trends 794 2.20 2.46 2.64 2.80 3.03

Fee income in millions of dollars

Has automated program 312 839.690 1,008.944 1,181.678 1,339.318 1,498.429

 Started program after 2001 212 442.0 529.1 614.4 679.7 751.8

 Had program in 2001 100 397.7 479.8 567.3 659.6 746.6

Offers linked or lines 380 101.9 108.5 115.7 112.0 118.1

 Started program(s) after 2001 17 3.6 5.2 5.3 5.1 5.0

 Had program(s) in 2001 363 98.3 103.3 110.4 106.9 113.1

No formal program 103 20.5 23.1 24.4 24.0 24.1

All banks reporting fee income trends 794 962.1 1,140.5 1,321.7 1,475.3 1,640.6

a

 Ratios of aggregate dollar amounts for the indicated group of banks.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

VIII.6. NSF-Related Fee Income and the Adoption of Automated Overdraft Programs

To examine how NSF-related income changed with the adoption of automated overdraft programs, study 

population banks that adopted these programs sometime during the 2002–2006 period were classified in 

terms of the year they adopted the programs. Given the year of program adoption, subsequent years of 

fee income were identified to measure fee-income charges in each year after program implementation.42

Figure VIII-1 illustrates that the median study population bank adopting an automated overdraft 

42 Changes in fee-income ratios are measured relative to a bank’s ratio for the calendar year prior to the program implementation (for at least six months). It should also be noted that because bank program adoptions were distributed fairly evenly across 

the five-year period, the five years of fee-income data yielded fewer observations for later years of program operation. For example, there are four years of subsequent fee-income data for a bank that started its program in late 2002, but there are only three 

subsequent years of fee-income data for an institution that started a program in late 2003).

Table VIII-8

Trends in NSF-Related Fee Income Ratios by Quartiles

Classified by Programs Offered 

Banks w/ 

Complete 

Income 

Data

NSF-Related Fee Income Ratio

 to Net Operating Revenue (Percent)

NSF-Related Fee Income as

Percent of Avg Transactions Deposits

2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

25th percentile 25th percentile

Has automated program 312 3.93 4.29 4.56 4.65 4.36 0.9 0.87 1.09 1.09 1.1

 Started program after 2001 212 3.4 3.87 3.75 4.05 4.17 0.72 0.66 0.87 1.01 1.05

 Had program in 2001 100 4.92 5.14 5.05 5.41 5.14 1.43 1.52 1.54 1.31 1.24

No automated program; had linked 

or LOC program in 2006

380 2.68 2.54 2.42 2.37 2.52 0.57 0.57 0.56 0.57 0.54

 Adopted program(s) after 2001 17 0.76 1.38 1.04 1.26 1.29 0.22 0.24 0.26 0.35 0.32

 Had program(s) in 2001 363 2.74 2.74 2.6 2.51 2.6 0.57 0.57 0.57 0.57 0.56

No formal program 103 4.76 4.84 5.08 5.65 5.57 0.74 0.89 0.86 0.85 0.95

Total banks with complete fee 

income dataa

795 3.42 3.66 3.72 3.63 3.67 0.67 0.66 0.69 0.66 0.76

Median Median

Has automated program 312 5.69 6.44 6.7 7.18 7.19 1.42 1.56 1.62 1.74 1.75

 Started program after 2001 212 5.57 5.99 6.2 6.67 6.47 1.14 1.35 1.38 1.63 1.67

 Had program in 2001 100 8.01 7.88 8.64 7.79 7.72 1.98 2.29 2.32 1.98 2.44

No automated program; had linked 

or LOC program in 2006

380 4.6 4.62 4.64 4.51 4.38 0.99 0.94 0.88 0.85 0.87

 Adopted program(s) after 2001 17 5.67 6.01 5.49 4.87 3.04 0.91 0.99 0.91 0.96 1.05

 Had program(s) in 2001 363 4.57 4.62 4.64 4.51 4.38 0.99 0.94 0.88 0.85 0.87

No formal program 103 6.77 7.75 7.78 7.34 6.99 1.32 1.36 1.47 1.31 1.2

Total banks with complete fee 

income dataa

795 5.23 5.7 5.56 5.54 5.86 1.15 1.23 1.19 1.14 1.18

75th percentile 75th percentile

Has automated program 312 8.88 9.93 10.66 10.89 10.61 2.39 2.59 2.6 2.8 2.8

 Started program after 2001 212 7.35 8.61 10.35 10.22 10.56 1.64 2.17 2.13 2.08 2.46

 Had program in 2001 100 10.81 10.99 11.53 12.92 11.63 3.97 3.84 3.51 3.91 4.27

No automated program; had linked 

or LOC program in 2006

380 7.12 7.13 6.7 6.48 6.41 1.5 1.6 1.4 1.26 1.33

 Adopted program(s) after 2001 17 6.37 8.37 6.55 5.51 5.6 1.06 1.41 1.14 1.01 1.2

 Had program(s) in 2001 363 7.21 7.13 7.22 6.53 6.41 1.53 1.63 1.4 1.26 1.35

No formal program 103 9.09 10.63 10.28 11.6 11.01 1.57 1.78 1.77 2 1.92

Total banks with complete fee 

income dataa

795 8.34 8.72 8.96 8.58 8.64 1.78 1.89 1.9 1.85 1.93

a

 Figures only include banks reporting complete NSF-related fee income data for 2002-2006.
FDIC Study of Bank Overdraft Pogams  n  November

Part One—Overdraft Survey VIII. Growth and Profitability of Overdraft Programs

program between 2002 and 2006 (and reporting feeincome trend data) had an increase in the ratio of 

NSF-related fees to net operating revenue of more 

than 20 percent in the first year of operation, and that 

subsequent increases were smaller. As indicated by the 

patterns for the 75th and 25th percentiles, there is 

substantial variation in fee-income share changes subsequent to the adoption of automated overdraft programs. 

While a sizable segment of institutions saw even larger 

increases in the share of net operating revenues coming 

from NSF-related fees, another segment did not experience much of an income-share increase after the establishment of this type of program.

Similar patterns are evident for changes in NSF-related 

fee income as a percentage of (average) transaction 

deposits. As depicted in Figure VIII-2, the median 

change in this fee-income ratio was positive in the first 

year an automated program was implemented, but there 

was a wide range in profitability trends subsequent to 

the adoption of automated overdraft programs by study 

population banks.

VIII.7. Summary

This section examined the importance of NSF-related 

fees for bank earnings and how these fees change after 

the adoption of an automated overdraft program. Banks 

in the study population are estimated to have earned 

$1.97 billion in NSF-related fees in 2006, representing 

74 percent of the $2.66 billion in service charges on 

deposit accounts reported in the bank Call Reports. 

Study population banks that operated automated overdraft programs earned $1.77 billion in NSF fees in 

2006, accounting for 90.0 percent of total NSF-related 

fee income earned by the entire study population.

NSF-related fee income as a share of net operating 

revenue was higher for study population banks with 

automated overdraft programs (6.7 percent), compared 

with banks that had only linked-account or overdraft 

LOC programs or both (2.7 percent), or banks with no 

formal overdraft program (3.9 percent). Among banks 

with automated overdraft programs, NSF-related fee income was a higher share of net operating revenue 

for banks whose programs covered ATM or POS/debit transactions (7.1 percent, compared with 3.4 

percent for banks whose automated overdraft programs did not cover these transactions). NSF-related 

fees also accounted for a larger share of operating revenues for banks that batch processed transactions 

largest-to-smallest (6.8 percent).

The profitability of overdraft-related services, as measured by the ratio of NSF-related fee income to 

average transaction-account balances, also varied with the types of overdraft programs operated. For the 

study population as a whole, NSF-related fees were 2.7 percent of the average transaction-account 

balances outstanding during 2006. Banks that operated automated overdraft programs had a higher ratio 

Figure VIII-1

Year relative to year prior to adoption of automated program (base year)

25th percentile

Median

75th percentile

Ratio in indicated year divided by base-year ratio

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

T-2 T-1 T=base year T+1 T+2 T+3 T+4

Changes in the Ratio of NSF-Related Fee Income

to Net Operating Revenue

Figure VIII-2

Year relative to year prior to adoption of automated program (base year)

25th percentile

Median

75th percentile

Ratio in indicated year divided by base-year ratio

Changes in the Ratio of NSF-Related Fee Income

to Average Transaction Deposits

T-2 T-1 T=base year T+1 T+2 T+3 T+4

0

0.5

1

1.5

2

2.5

3
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data VIII. Growth and Profitability of Overdraft Programs

of NSF-related fees to outstanding transaction deposits (3.4 percent) than those that had only linked 

accounts or overdraft LOCs or both (0.9 percent), or those that had no formal program in place (0.9 

percent). And among banks operating automated overdraft programs, those whose program covered 

ATM and POS/debit transactions had a higher fee-to-deposit ratio than those whose program did not 

cover these transactions (3.6 percent versus 1.7 percent). Study population banks that batch processed 

transactions largest-to-smallest had a higher profitability ratio than banks that batch processed smallestto-largest or not on a size basis (3.8 percent, 1.2 percent, and 2.0 percent, respectively).

Banks representing roughly two-thirds of the $2.66 billion in 2006 deposit-account service charges estimated for the study population reported charging off $124.2 million in deposit-account balances on 

401,000 accounts in 2006. Reporting banks that operated automated overdraft programs accounted for 

$117.3 million or 94.0 percent of the charged-off account balances reported. Charged-off accounts were 

a larger share of gross loan and lease charge-offs (14.3 percent) for banks with automated overdraft 

programs than for reporting banks that operated only linked accounts or overdraft LOCs or both 

(3.7 percent), or had no formal program in place (5.6 percent). Despite the larger share of charged-off 

account balances, the shares of NSF-related fee income net of account charge-offs relative to both net 

operating revenue and outstanding transaction deposits were still higher for banks with automated overdraft programs (6.0 percent of net operating revenue and 2.5 percent of transaction deposits). Banks with 

only linked-accounts or overdraft LOC programs (or both) reported net NSF-related fee income equal to 

2.7 percent of net operating revenue and 0.9 percent of average outstanding transaction deposits.

An examination of trends in the importance of NSF-related fees indicates a modest increase in NSFrelated fee income as a share of net operating revenue (from 5.5 percent in 2002 to 6.2 percent in 2006) 

among study population institutions reporting five years of NSF-related fee income. The upward trend 

was driven by banks operating automated overdraft programs. For study population banks that had an 

automated program in place for the entire five-year period, this fee-income share increased from 5.8 

percent in 2002 to 7.3 percent in 2006. In contrast, NSF-related fee income declined as a share of net 

operating revenue (from 3.5 percent in 2002 to 2.7 percent in 2006) for banks that did not operate 

automated overdraft programs but had only linked-account or overdraft LOC programs (or both) during 

this period.

Analysis of banks that adopted automated overdraft programs during 2002 through 2006 (and reported 

fee-income trend data) indicates that the median study population bank adopting an automated overdraft program had an increase in the ratio of NSF-related fees to net operating revenue of more than 

20 percent in the first year of operation, and that subsequent increases were smaller. Similarly, patterns 

are evident for changes in NSF-related fee income as a percentage of (average) outstanding transaction 

deposits. However, although on average the adoption of automated overdraft programs was associated 

with increases in both NSF-related fee-income ratios, there was substantial variation in fee-income 

trends among banks that started programs of this type.
FDIC S November tud 2008 y of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data

IX. Micro-Level Data: Consumer 

Overdraft Usage

This section analyzes actual coverage of overdraft programs by customers of 39 banks reporting the 

micro-level customer and transaction data (micro-data).43 In particular, this section focuses on the use 

of automated overdraft programs. It provides descriptive information about the types and median size of 

NSF-related transactions, and reports differences in overdraft activity across different income levels and 

age groups.

As described in the methodology, the micro-data were obtained from a nonrandom sample of 39 institutions that emphasized large retail banks to ensure a wide coverage of consumer accounts. Micro-data 

banks were asked to provide comprehensive customer-level information, including the type of the 

account, the type of overdraft coverage that applied to the account, the ZIP code location of the account 

holder, the account holder’s year of birth, the date the account was opened, and the average account 

balance during the previous 12 months. The data request was designed to mask any customer information that could raise privacy concerns.

Micro-data banks were also asked to report individual NSF transactions processed during a 12-month 

period under an automated overdraft program, if one was in place, or under no formal program (overdraft processed on an ad hoc, discretionary basis). These data included the type of the transaction 

(i.e., check, POS/debit, ATM), the date and amount of the transaction, whether the item was paid or 

returned unpaid, and the NSF fee charged. To minimize the data-gathering burden for banks, the microdata collected 12 consecutive months of NSF transaction data for the period that was most feasible for 

banks to provide. All of the transaction data analyzed in this section reflect customer NSF activity for 

12 consecutive months that occurred between January 2005 and September 2008. The data collection 

instrument used in the micro-data collection effort is attached as Appendix B.

As mentioned in the methodology, this portion of the study involved a nonrandom sample, so it is not 

possible to draw statistical inferences from any bank-level analysis using these data. Nevertheless, these 

micro-data provide unprecedented and valuable information about consumer usage and fee reliance on 

the automated overdraft programs.

IX.1. Overview of Overdraft Programs Operated and Account Coverage of Micro-Data Banks

The 39 micro-data banks reported a total of $332 billion in assets and more than 6.5 million consumer 

transaction accounts with a total account balance of $35.6 billion.44 Of the 39 banks, 28 had an automated overdraft program in place. These banks accounted for 98.2 percent of the consumer accounts 

analyzed and 94.4 percent of the deposit balances held in these accounts (see Table IX-1). Among the 

28 banks that operated an automated overdraft program, half (14 out of 28) had a nonpromoted automated program (see Table IX-2). Of the 11 micro-data banks that did not operate an automated overdraft program, 10 had other formal overdraft programs in place (i.e., linked-account programs, overdraft 

LOC programs, or both), and one did not have a formal overdraft program in place. These 11 banks 

accounted for 1.8 percent of the consumer accounts analyzed and 5.6 percent of the total deposit dollars.

43 The survey results reported in Sections III to VIII provide information about the types of overdraft programs operated by a 

bank, but do not provide evidence about actual number of accounts covered by particular types of programs at a bank.

44 The asset information is based on the December 2006 Call Report data. The number of accounts reported excludes business 

accounts, savings accounts (other than checkable accounts), new accounts, and customers with more than ten accounts.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

Among the consumer accounts in the micro-data, 98.2 percent were held in banks with automated 

overdraft program (see Table IX-1). Most accounts (86.3 percent) were covered by a nonpromoted automated overdraft program (see Table IX-3). This result was driven by the fact that micro-data institutions 

with nonpromoted automated programs were very large (most with more than $5 billion in assets) (see 

Table IX-2). In contrast, a much smaller proportion of the consumer transaction accounts analyzed had 

overdraft coverage under linked-accounts (12.8 percent) or overdraft LOC programs (3.2 percent). 

Note that an account could be covered under multiple overdraft programs (see Table IX-3).

Table IX-1

Consumer Transaction Accounts and Deposit Dollars Held in Micro-Data Banks by 

Overdraft Program Type Offered

Suma

Percent of Row Total By Program Type

Category All Automated Nonautomated

Number of banks 39 28 11

100.0 71.8 28.2

Number of accounts 6,539,446 6,420,017 119,429

100.0 98.2 1.8

Deposits ($ Millions) 35,578 33,599.6 1,978.5

100.0 94.4 5.6

a

Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

Table IX-2

Overdraft Protection Programs Offered by Micro-Data Banks

Frequency of Study Population

Percent of Column Total By Asset Size

Did your institution operate 

this program at any point in 

2006 or 2007? All

Less than 

$250 Million

$250 Million 

to Less than 

$1 Billion

Greater 

than 

$1 Billion

Memo Item(s):

$1 Billion to 

$5 Billion

Greater 

than 

$5 Billion

By Automated Overdraft Program

Automated 28 9 0 19 3 16

71.8 75.0 0.0 79.2 42.9 94.1

 Promoted 14 9 0 5 1 4

35.9 75.0 0.0 20.8 14.3 23.5

 Nonpromoted only 14 0 0 14 2 12

35.9 0.0 0.0 58.3 28.6 70.6

No automated 11 3 3 5 4 1

28.2 25.0 100.0 20.8 57.1 5.9

 Linked and/or LOCs 10 2 3 5 4 1

25.6 16.7 100.0 20.8 57.1 5.9

 No formal program only 1 1 0 0 0 0

2.6 8.3 0.0 0.0 0.0 0.0

Total data download banks 39 12 3 24 7 17

100.0 100.0 100.0 100.0 100.0 100.0
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

IX.2. Characteristics of Automated Overdraft Programs Operated by Micro-Data Banks

The 28 micro-data banks that operated automated overdraft programs reported 6.4 million consumer 

accounts with an aggregate average balance of $33.6 billion (see Table IX-1). Of these accounts, 

71.3 percent were checking accounts, 19.9 percent were NOW accounts, and 8.8 percent were MMD 

accounts (see Table IX-4).

In 26 of the 28 micro-data banks operating automated programs, customers were automatically enrolled 

in the program and were required to affirmatively opt out of the program if they did not want this type of 

overdraft coverage (see Table IX-5). Most banks that operated automated overdraft programs (89.3 

percent) advanced funds to cover all types of transactions (see Table IX-6). Almost all micro-data banks 

with automated overdraft covered POS/debit transactions. One bank covered overdrafts originated only 

through checks.

Most micro-data banks with automated overdraft programs (67.9 percent) batch processed transactions 

by size, starting with the largest transactions (see Table IX-7). Consistent with the survey results, largestto-smallest batch processing was more prevalent among large institutions. About 18 percent of the banks 

that provided micro-data batch processed items starting with the smallest item, and these were all small 

banks.

Table IX-3

Overdraft Program Coverage for Consumer Transaction Accounts 

for All Micro-Data Banks

Account Coverage Type

Suma

Percent of Column Total

Linked accounts covered 834,866 

12.8

Covered by LOC 209,551 

3.2

Covered by promoted automated programs 248,853 

3.8

Covered by nonpromoted automated programs 5,644,784 

86.3

Total consumer transaction accountsb 6,539,446 

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Some accounts are covered by multiple programs.

Table IX-4

Type of Accounts by Neighborhood Income for Micro-Data Banks with 

Automated Overdraft Programs

Percentage of Row Total By Account Typea

Census Tract Income Bracket All Checking NOW MMD

Low income 100.0 76.2 18.6 5.2

Moderate income 100.0 76.2 17.2 6.6

Middle income 100.0 72.0 19.8 8.2

Upper income 100.0 66.3 22.2 11.6

Income not classified 100.0 72.1 15.2 12.8

No tract 100.0 79.8 11.8 8.3

All income classes 100.0 71.3 19.9 8.8

a

Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

Table IX-5

Opt-In/Opt-Out Policies of Micro-Data Banks with Automated Overdraft Programs 

Number of Banks

Percent of Column Total By Asset Size

Did customers opt-in or opt-out of you

institution’s program, or was the option 

not available? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

Opt-out 26 9 0 17

92.9 100.0 NA 89.5

Other 2 0 0 2

7.1 0.0 NA 10.5

Total micro-data banks with automated 28 9 0 19

100.0 100.0 NA 100.0

Note: NA = not applicable.

Table IX-6

Transactions Covered by Micro-Data Banks with Automated Overdraft Programs

Number of Banks

Percent of Column Total By Asset Size

Which transactions were covered by 

your institution’s program in the event of 

an overdraft? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

All Transaction Combinations

Checks, ATM, POS/debit, and any ACH 25 8 0 17

89.3 88.9 NA 89.5

Checks, POS/debit, and any ACH 1 0 0 1

3.6 0.0 NA 5.3

Checks and any ACH 1 1 0 0

3.6 11.1 NA 0.0

Checks only 1 0 0 1

3.6 0.0 NA 5.3

Total micro-data banks with automated 28 9 0 19

100.0 100.0 NA 100.0

Note: NA = not applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

IX.2.A. Distribution of Consumer Transaction Accounts by Income Group

The micro-data request collected nine-digit ZIP code data of consumer account holders. ZIP code information was also used to identify the census tract and income bracket associated with an account holder. 

Income brackets were determined by comparing the family median income of a census tract to the family 

median income for the metropolitan statistical area (MSA) where the census tract was located.45 Lowincome tracts were those where the median income was less than 50 percent of MSA median income; 

moderate-income tracts had median income between 50 percent and 80 percent of the MSA median 

income; middle-income tracts had median income between 80 percent and 120 percent of the MSA 

median income; and upper-income tracts had median income that exceeded 120 percent of the MSA 

median.46 Table IX-8 shows the dollar range for each income level, calculated using the lowest and the 

highest MSA family median income in 2006. For example, the lowest median income in the country 

45 For census tracts in rural areas, family median income was compared to family median income of all rural tracts in the state. 46 This classification follows the standards used for the purposes of the Community Reinvestment Act.

Tabe IX-7

Transaction Batch-Processing Method for Micro-Data Banks with 

Automated Overdraft Programs

Number of Banks

Percent of Column Total By Asset Size

For those items that are batch 

processed, which method best describes 

the order in which transactions were 

typically paid by your institution? All

Less than 

$250 Million

$250 Million to 

Less than 

$1 Billion

Greater than 

$1 Billion

By order of presentation 2 1 0 1

7.1 11.1 NA 5.3

By size, largest-to-smallest 19 3 0 16

67.9 33.3 NA 84.2

By size, smallest-to-largest 5 5 0 0

17.9 55.6 NA 0.0

Other 2 0 0 2

7.1 0.0 NA 10.5

Total micro-data banks with automated 28 9 0 19

100.0 100.0 NA 100.0

Note: NA = not applicable.

Table IX-8

Median Family Income Thresholds by Census Tract Income Bracket

Dollar Amounts 2006 HUD MSA Estimates

2006 USAa

Lowest Highest

(McCallen-EdinburgMission MSA, TX)(Bethesda-GaithersburgFrederick MSA, MD)

Family median income $58,526 $30,800 $98,400 

By census tract income (upper bound except where indicated):

Low $29,263 $15,400 $49,200 

Moderate $46,821 $24,640 $78,720 

Middle $70,231 $36,960 $118,080 

Upper (lower bound) $70,231+ $36,960+ $118,080+

a

 2006 USA estimates based on 2006 American Community Survey.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

(McCallen-Edinburg-Mission, Texas) was $30,800. Therefore, moderate-income families in this area 

earned an annual income between $15,400 and $24,640.

For micro-data banks with automated overdraft programs, 81.5 percent of the 6.4 million consumer 

accounts were held by customers located in middle- and upper-income neighborhoods (see Table IX-9). 

Accounts held by consumers located in low- and moderate-income areas made up 16.5 percent of 

consumer accounts in the micro-data (2.3 percent in low-income and 14.2 percent in moderate-income 

areas). As a reference, low- and moderate-income areas account for 25.0 percent of the country’s population (4.0 percent in low-income and 21.0 percent in moderate-income areas), 50.0 percent of the 

country’s population reside in middle-income areas, and 24.0 percent reside in upper-income areas.47

Approximately 2 percent of the consumer accounts analyzed could not be classified in terms of neighborhood income because of incomplete or erroneous ZIP codes.48

The type and average balance of accounts held at micro-data banks with automated overdraft programs 

differed by income area. More than three-fourths of accounts in low- and moderate-income areas were 

checking accounts, and less than 6 percent were MMDs. In contrast, micro-data accounts in upper47 According to the 2000 U.S. Census Bureau data from the Federal Financial Institutions Examination Council (FFIEC) 2006 

census data file.

48 A nine-digit ZIP code was used to assign the census tract for 5.6 million accounts (86 percent). For 763,000 accounts (12 

percent), a five-digit ZIP code was used to approximate the census tract. Approximately 127,000 consumer accounts in the microdata did not have a valid ZIP code. 

Table IX-9

Customer Accounts by Income Group for Micro-Data Banks with 

Automated Overdraft Programs

Census Tract Income Bracket Percent of Column Total

Low income 2.3

Moderate income 14.2

Middle income 54.2

Upper income 27.3

Income not classified 0.0

No tract 2.0

All income classes 100.0

a

Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

Table IX-10

Account Balance by Average Dollar Amount Held and Income Group for Micro-Data Banks with 

Automated Overdraft Programs

Percent of Row Total By Account Balancea

Census Tract Income Bracket All

Less than 

100

Less than 

500

Less than 

1,000

Less than 

2,000

Less than 

3,000

3,000 

or More Unknownb

Low income 100.0 56.7 14.6 8.5 7.3 3.0 9.9 0.0

Moderate income 100.0 39.1 16.2 11.2 10.8 5.1 17.7 0.0

Middle income 100.0 30.3 15.5 11.8 12.8 6.4 23.1 0.0

Upper income 100.0 33.5 14.4 9.1 10.7 6.2 26.1 0.0

Income not classified 100.0 32.2 14.8 10.0 7.7 5.1 30.2 0.1

No tract 100.0 26.2 16.1 12.3 13.0 6.6 25.9 0.0

All income classes 100.0 32.9 15.3 10.9 11.8 6.1 22.9 0.0

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Includes customers with missing data on account balance. 
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

income areas had the highest proportion of NOW and MMD accounts (22.2 percent and 11.6 percent, 

respectively), and two-thirds of accounts were checking accounts (see Table IX-4).

Regarding account balance, more than half (56.7 percent) of the micro-data accounts in low-income 

areas held less than $100, on average, during the period of analysis (see Table IX-10). In comparison, 

39.1 percent of micro-data accounts in moderate-income areas had less than $100 on average. Middleand upper-income areas had approximately one-third of accounts with less than $100 and about one 

quarter of accounts with an average balance of $3,000 or more.

IX.3. Patterns of NSF Activity and Fees for Micro-Data Banks with Automated Overdraft Programs

As noted earlier, the micro-data request collected 12 months of NSF transaction activity processed 

under automated overdraft programs. For institutions with no automated overdraft programs (including 

banks that operated only linked-accounts or overdraft LOC programs or both), the NSF transaction data 

included only NSF items processed on an ad hoc basis and usually through a manual review process. The 

micro-data did not collect NSF transactions processed under linked-account or overdraft LOC programs.

Micro-data banks reported 22.6 million NSF transactions incurred by consumer accounts during the 

12-month period of analysis.49 Almost all (22.5 million) of the NSF transactions analyzed were reported 

by the 28 micro-data banks that operated automated overdraft programs.

For the 28 micro-data banks with an automated program, 74.3 percent of consumer accounts had no 

NSF transactions during the 12-month period examined (see Table IX-11). However, 11.9 percent of 

accounts had 1 to 4 transactions, 5.0 percent had 5 to 9 transactions, 4.0 percent had 10 to 19 transactions, and 4.9 percent of accounts incurred 20 or more NSF transactions. Accounts with at least 10 NSF 

transactions were charged 84.0 percent of all NSF fees, and the 4.9 percent with 20 or more NSF transactions were charged more than 68 percent of all NSF fees (see Table IX-12).

Micro-data banks with automated overdraft programs charged consumer transaction accounts a total of 

$738 million in NSF fees over the 12-month period of the study. Consumer accounts with one to four 

transactions were charged an average $64 per year in NSF fees (see Table IX-13). For accounts with 20 

or more transactions, the average annual cost was $1,610.

For the 11 micro-data banks with no automated program, 81.6 percent of consumer accounts had no 

NSF transactions during the year, 12.7 percent had 1 to 4 transactions, and 1.4 percent had more than 

49 For all 39 micro-data banks, 91.2 percent of the 22.6 million NSF transactions were paid, 8.3 percent were not paid, and 

payment information was missing for 0.5 percent. 

Table IX-11

Customer Accounts by Number of NSF Transactions per Year and Income Group 

for Micro-Data Banks with Automated Overdraft Programs

Percentage of Row Total By Number of Transactionsa

Census Tract Income Bracket All Zero 1 to 4 5 to 9 10 to 19 20 or More

Low income 100.0 61.9 16.7 7.6 6.3 7.5

Moderate income 100.0 68.4 13.9 6.2 5.1 6.4

Middle income 100.0 74.3 11.8 5.0 4.0 4.9

Upper income 100.0 78.2 10.5 4.2 3.3 3.8

Income not classified 100.0 74.6 12.2 6.0 3.6 3.6

No tract 100.0 74.2 12.6 5.1 3.9 4.3

All income classes 100.0 74.3 11.9 5.0 4.0 4.9

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

20 transactions (see Table IX-14). As with the other banks, the majority of fees (61.5 percent) were 

charged to accounts with more than 20 transactions.

IX.3.A. NSF Activity by Income Group for Micro-Data Banks

For micro-data banks with automated overdraft programs, lower-income groups were more likely to 

incur NSF charges than higher-income groups. About 62 percent of accounts in low-income areas had 

zero NSF charges, while 78.2 percent of accounts in upper-income areas had zero NSF charges (see 

Table IX-11). Recurrent overdrafts were also more likely in lower income groups. Among low-income 

customers, 16.7 percent of accounts had 1 to 4 NSF transactions, and 7.5 percent had 20 or more transactions. By comparison, moderate-income customers had 13.9 percent of accounts with 1 to 4 NSF 

transactions and 6.4 percent of accounts with 20 or more NSF transactions. Customers in upper-income 

Table IX-12

NSF Fees Charged by Income Group and by Number of NSF Transactions per Year 

for Micro-Data Banks with Automated Overdraft Programs

Percent of Row Total By Number of Transactionsa

Census Tract Income Bracket All 1 to 4 5 to 9 10 to 19 20 or More

Low income 100.0 6.2 9.6 16.9 67.2

Moderate income 100.0 6.1 9.1 15.9 68.9

Middle income 100.0 6.6 9.2 15.4 68.8

Upper income 100.0 7.2 9.8 15.9 67.1

Income not classified 100.0 8.3 14.0 18.5 59.1

No tract 100.0 7.9 10.9 17.2 64.1

All income classes 100.0 6.6 9.4 15.7 68.3

a

Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

Table IX-13

Annual Dollar Amount of NSF Fees Charged per Consumer Account for 

Micro-Data Banks with Automated Overdraft Programs

Average Dollar Amount By Number of Transactionsa

Census Tract Income Bracket All 1 to 4 5 to 9 10 to 19 20 or More

Low income 174 64 221 464 1,568

Moderate income 148 65 218 457 1,597

Middle income 116 65 215 449 1,618

Upper income 92 63 213 446 1,613

Income not classified 89 61 207 458 1,460

No tract 103 65 220 459 1,536

All income classes 115 64 215 451 1,610

a

Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

Table IX-14

Customer Accounts and NSF Fees by Number of NSF Transactions per Year 

for Banks with No Automated Overdraft Program

Percentage of Row Total By Number of Transactionsa

Category All NSF Classes Zero 1 to 4 5 to 9 10 to 19 20 or More

Accounts 100.0 81.6 12.7 2.9 1.5 1.4

NSF fees 100.0 0.0 14.6 11.6 12.3 61.5

a

Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

areas had 10.5 percent of accounts with 1 to 4 transactions and just 3.8 percent of accounts with 20 or 

more NSF transactions.

The micro-data request asked the banks to identify the type of NSF transaction: paper checks or 

equivalents, ATM withdrawals, POS/debit, or ACH transactions. The largest share of NSF transactions 

(41.0 percent) reported by micro-data banks with automated programs was generated at POS/debit 

terminals, while ATM transactions accounted for 7.8 percent of all NSF transactions analyzed (see 

Table IX-15). These two types of electronic payments accounted for nearly half of all NSF transactions. 

Checks remained a significant source of NSF transactions (30.2 percent). NSF transactions via ACH 

accounted for 14.2 percent of reported overdraft items. In contrast, the NSF transactions processed 

for the 11 micro-data banks with no automated overdraft program exhibited very different results. For 

these banks, the NSF approval or denial occurred on a case-by-case basis (as opposed to an automated 

process), and real-time transactions such as NSF originating at ATM or POS/debit terminals were 

generally rejected.50 Accordingly, less than 1 percent of the NSF transactions processed under no formal 

50 If the ATM or POS/debit terminal was offline, real-time funds verification was not possible and transactions could be 

approved, causing an inadvertent NSF.

Table IX-15

NSF Transactions by Income Group and Transaction Type 

for Micro-Data Banks with Automated Overdraft Programs

Percent of Row Total By Transaction Typea

Census Tract Income 

Bracket All Check ATM POS/Debit ACH Otherb Unknownc

Low income 100.0 21.2 16.4 40.6 15.2 5.8 0.8

Moderate income 100.0 26.7 10.7 40.1 15.0 5.1 2.4

Middle income 100.0 31.4 7.0 40.2 14.0 4.0 3.4

Upper income 100.0 30.8 6.1 44.2 13.8 2.9 2.3

Income not classified 100.0 37.1 4.7 42.2 14.5 1.0 0.5

No tract 100.0 36.3 7.9 37.4 14.2 3.4 0.7

All income classes 100.0 30.2 7.8 41.0 14.2 4.0 2.8

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Includes all transactions designated as “other.”

c

 Includes all transactions with missing data on transaction type. 

Table IX-16

NSF Transactions by Income Group and Transaction Type 

for Micro-Data Banks with Nonautomated Overdraft Programs

Percent of Row Total By Transaction Typea

Census Tract Income 

Bracket All Check ATM POS/Debit ACH Otherb Unknownc

Low income 100.0 73.9 0.0 0.0 14.2 11.8 0.0

Moderate income 100.0 65.0 0.0 0.1 24.9 10.1 0.0

Middle income 100.0 63.4 0.1 0.3 25.0 11.2 0.0

Upper income 100.0 69.3 0.1 0.0 13.9 16.7 0.0

Income not classified 100.0 79.2 0.0 0.0 3.8 17.0 0.0

No tract 100.0 74.6 0.0 0.0 24.8 0.6 0.0

All income classes 100.0 67.5 0.1 0.1 19.2 13.2 0.0

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Includes all transactions designated as “other.”

c

 Includes all transactions with missing data on transaction type. 
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

program originated at an ATM or POS/debit transaction (see Table IX-16). For these micro-data banks, 

most NSF transactions (67.5 percent) were check transactions.

The median dollar amount of all 22.5 million transactions processed by micro-data banks with automated programs was $36 (see Table IX-17). POS/debit NSF transactions were not only the most 

frequent, but also the smallest, with a median value of $20. The median transaction size of an ATM 

withdrawal and a check that resulted in an NSF transaction were $60 and $66, respectively. ACH NSF 

transactions showed the largest median at $78.

The following calculations illustrate the relative cost of NSF fees associated with automated overdraft 

programs. A customer repaying a $20 POS/debit overdraft in two weeks would incur an APR of 3,520 

percent, a customer repaying a $60 ATM overdraft in two weeks would incur an APR of 1,173 percent, 

and a customer repaying a $66 check overdraft in two weeks would incur an APR of 1,067 percent.51

More rapid repayment of the overdraft amount would result in higher APRs, and slower repayment 

would result in lower APRs.

IX.3.B. NSF Activity by Age Group for Micro-Data Banks

The micro-data request collected year-of-birth information for 94.1 percent of the 6.5 million consumer 

accounts held in banks with automated overdraft programs. Adults (ages 26 to 61) held approximately 

half (54.9 percent) of consumer accounts analyzed, while seniors (age 62 or older) and young adults 

(ages 18 to 25) accounted for 31.3 percent and 7.6 percent, respectively, of consumer accounts analyzed 

in the micro-data (see Table IX-18).

Young adults had the largest share of accounts with NSF activity during the year, while seniors had the 

smallest share. Only 53.6 percent of young adults had no NSF transactions, while 68.1 percent of adults 

and 87.8 percent of seniors had no NSF activity (see Table IX-19). Nearly 15 percent of accounts held 

by young adults recorded more than ten NSF transactions during the year, compared with 12.1 percent 

of adult accounts and 3.0 percent of senior accounts.

51 These examples assume a $27 overdraft fee (the bank survey median reported in Section IV), the credit extended as 

a result of the overdraft occurrence equaled the total transaction, the consumer repaid the credit extended in two 

weeks, and no additional fees are imposed on the consumer as a result of the NSF. The APR is calculated as 

follows: ((Fee Charged/Amount Financed)*365)/Term (14 days). 

Table IX-17

Median NSF Transaction Amount by Income Group and Type of Transaction 

for Micro-Data Banks with Automated Overdraft Programs

Median Dollar Amount By Type of Transactiona

Census Tract Income 

Bracket All Check ATM POS/Debit ACH Otherb Unknownc

Low income 39 81 60 19 68 25 178

Moderate income 37 70 60 19 72 29 72

Middle income 35 62 60 20 76 20 55

Upper income 37 75 60 20 94 23 87

Income not classified 45 128 60 20 108 41 NA

No tract 37 55 60 20 66 99 101

All income classes 36 66 60 20 78 22 60

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Includes all transactions designated as “other.”

c

 Includes all transactions with missing data on transaction type. 

Note: NA = not applicable.
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

The type of NSF transactions also differed across age groups. Among young adults, 61.7 percent of NSF 

transactions originated at a POS/debit terminal, while less than 15 percent of NSF transactions were 

generated from checks (see Table IX-20). In contrast, for seniors the largest share of NSF transactions 

(46.0 percent) originated from checks, while less than one in four NSF transactions (23.2 percent) 

originated at POS/debit terminals. The median amount of the NSF transactions for checks was $60 for 

both groups, but the POS/debit median transaction resulting in an NSF was $24 for seniors and only $12 

for young adults (see Table IX-21).

Table IX-18

Customer Accounts by Age Group for Micro-Data Banks with 

Automated Overdraft Programs

Age Group Percent of Column Totala

Over 62 31.3

26-61 54.9

18-25 7.6

Less than 18 0.4

Unknown 5.9

All age groups 100.0

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

Table IX-19

Customer Accounts by Number of NSF Transactions in a Year per Age Group 

for Micro-Data Banks with Automated Overdraft Programs

Percentage of Row Total By Number of Transactionsa

Age Group All Zero 1 to 4 5 to 9 10 to 19 20 or More

Over 62 100.0 87.8 7.0 2.2 1.5 1.5

26-61 100.0 68.1 13.7 6.1 5.2 6.9

18-25 100.0 53.6 21.5 10.3 7.9 6.8

Less than 18 100.0 78.1 12.1 4.0 3.0 2.7

Unknown 100.0 86.2 7.5 2.4 1.8 2.1

All age classes 100.0 74.3 11.9 5.0 4.0 4.9

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

Table IX-20

NSF Transactions by Age Group and Transaction Type 

for Micro-Data Banks with Automated Overdraft Programs

Percent of Row Total By Transaction Typea

Age Group All Check ATM POS/Debit ACH Otherb Unknownc

Over 62 100.0 46.0 8.1 23.2 16.7 3.5 2.7

26-61 100.0 29.8 7.8 41.1 14.5 4.0 2.8

18-25 100.0 14.4 8.0 61.7 8.7 4.0 3.2

Less than 18 100.0 27.2 10.1 42.4 13.0 4.1 3.3

Unknown 100.0 43.5 5.0 24.4 18.3 5.4 3.3

All income classes 100.0 30.2 7.8 41.0 14.2 4.0 2.8

a Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Includes all transactions designated as “other.”

c

 Includes all transactions with missing data on transaction type. 
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

IX.4. Summary

This section reported patterns in actual overdraft coverage and overdraft activity for 39 banks that 

provided micro-level data on consumer accounts and NSF transactions that were processed under an 

automated program or processed on an ad hoc basis under no formal program. Of the 39 micro-data 

banks, 28 had an automated overdraft program in place, and most of these were nonpromoted.

Roughly 75 percent of consumer accounts held in micro-data banks with automated overdraft programs 

had no NSF item in the 12 months of reported data on NSF activity. However, NSF activity reported in 

the micro-data was concentrated in a subset of accounts that reported recurring overdrafts during the 

period of analysis. Almost 9 percent of accounts had at least 10 NSF transactions, and 4.9 percent of 

accounts incurred 20 or more NSF transactions. A large share (84.0 percent) of total NSF fees were 

charged to these accounts, with more than 68 percent of NSF fees charged to accounts with 20 or more 

transactions. For consumer accounts with 20 or more transactions, the average annual cost of NSF fees 

was $1,610.

The micro-data also showed differences in overdraft activity and fees charged by income group. 

Accounts in lower-income areas were more likely to incur overdrafts than accounts in higher-income 

areas. More than 38 percent of low-income accounts had at least one NSF transaction, compared with 

22 percent of upper-income accounts. Lower-income customers were also more likely to have repeated 

overdraft transactions. Almost 14 percent of low-income customers had 10 or more NSF transactions, 

and 7.5 percent had more than 20 NSF transactions. Moderate-income customers had 11.5 percent of 

accounts with ten or more transactions. Customers in upper-income areas had just 7.1 percent of 

accounts with 10 or more NSF transactions, and less than 4 percent with 20 or more NSF transactions.

POS/debit and ATM transactions accounted for almost half the NSF transactions at micro-data banks 

with automated overdraft programs. Checks accounted for 30.2 percent of overdraft transactions at 

banks with automated programs. The median dollar value of transactions at banks with automated 

programs was $20 for POS/debit, $60 for ATM, and $66 for checks. Assuming a $27 overdraft fee (the 

survey median), a customer repaying a $20 POS/debit overdraft in two weeks would incur an APR of 

3,520 percent; a customer repaying a $60 ATM overdraft in two weeks would incur an APR of 1,173 

percent; and a customer repaying a $66 check overdraft in two weeks would incur an APR of 1,067 

percent. More rapid repayment of the overdraft amount results in higher APRs and slower repayment 

results in lower APRs.52

52 These examples assume that the credit extended as a result of the overdraft occurrence equaled the total transaction, that 

the consumer repaid the credit extended in two weeks, and that no additional fees were imposed on the consumer as a result of 

the NSF. The APRs were calculated as follows: ((Fee Charged/Amount Financed)*365)/Term (14 days).

Table IX-21

Median NSF Transaction Amount by Age Group and Type of Transaction 

for Micro-Data Banks with Automated Overdraft Programs

Median Dollar Amount By Transaction Typea

Age Group All Check ATM POS/Debit ACH Otherb Unknownc

Over 62 49 60 60 24 66 19 57

26-61 38 68 60 20 82 25 75

18-25 20 60 40 12 60 14 60

Less than 18 30 54 60 16 67 14 55

Unknown 50 77 60 23 86 30 35

All income classes 36 66 60 20 78 22 60

a

 Excludes business accounts, savings accounts, other than checkable accounts, new accounts, and customers with more than 10 accounts.

b

 Includes all transactions designated as “other.”

c

 Includes all transactions with missing data on transaction type. 
FDIC Study of Bank Overdraft Pogams  n  November

Part Two—Micro-Level Data IX. Micro-Level Data: Consumer Overdraft Usage 

During the period of analysis, young adults were more likely, and seniors less likely, to have NSF activity. 

Among young adults, 46.4 percent of accounts incurred NSF activity, compared with 31.9 percent of 

accounts held by adults and 12.2 percent of accounts held by seniors. Based on the type of NSF transactions, the micro-data suggest greater reliance on electronic payments among young adults, with most 

NSF transactions originating at a POS/debit terminal and less than 15 percent resulting from checks. In 

the case of seniors, the largest share of NSF transactions (46.0 percent) originated from checks, while 

fewer than one in four NSF transactions (23.2 percent) originated at POS/debit terminals. The median 

check NSF amount was the same for seniors and young adults ($60), but POS/debit transactions resulting in an NSF tended to be smaller for young adults ($12, compared with $24 for seniors and $20 for 

other adults).
FDIC S November tud 2008 y of Bank Overdraft Pogams  n  November

Principle Authors, Analysts, and Survey and Data Collection Overseers:

Division of Supervision and Consumer Protection:

Patricia Cashman

Robert Cordeiro

Victoria Pawelski

Division of Insurance and Research:

Susan Burhouse

Timothy Critchfield

Yan Lee

Katherine Samolyk

Many others on the staff of the FDIC worked on various aspects of the study, including: Anne Beavers, 

David Chapman, Dennis Clague, Ross Dierdorff, Joe Fellerman, Peggi Gill, Ryan Goodstein, Jocelyn 

Grazal, Don Inscoe, David Lee, Allison Mulcahy, Emily Song, Brent Webster, and Kathy Zeidler from 

the Division of Insurance and Research; Sharon Adkisson, April Breslaw, Matthew Duke, Pat Farrell, 

Jennifer Graham, Kevin Green, Mary Ann Hartman, Mike Lapinsky, Carol Liquori, Marilyn Medina, 

Corrine Moore, Nydia Moore, Amy Neal, Craig Nulliner, John Penkala, Juanita Pinkston, Deborah 

Stephenson, Jim Tylicki, Matt Valentine, and Jana Aylett Wong from the Division of Supervision and 

Consumer Protection; Leneta Gregorie and Steve Hanft from the Legal Division; and Yazmin Osaki and 

Barbara Ryan from the Office of the Vice Chairman. 

FDIC Study Group on Bank Overdraft Programs
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A

FDIC Overdraft Survey Instrument

Institution Programs and Practices

Final Version: June 26, 2008

Table of Contents

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Survey I Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

I. GENERAL & AGGREGATE

A. Scope of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

B. Aggregate Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

C. General Processing Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

D. Program Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

II. PROGRAM SPECIFIC

A. Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

B. Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

C. Information Provided to Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

D. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

E. Account Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

F. Vendors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Public Burden Statement

It is estimated that completing this form, including reviewing the instructions and gathering the data needed, 

takes an average of 3 hours. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to the Paper Reduction Act Clearance Officer,

Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, N.W., Washington, D.C. 20429. An ag

may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it 

displays a currently valid OMB control number. This form is OMB control number 3064-0155
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

Definitions 

A. Programs

(1) Linked Transfer Accounts

A contractual agreement between a bank and a customer, linking the customer’s transactions account with 

other accounts within the bank, including savings and credit card accounts. In the event of an overdraft, the

bank will fulfill the customer’s obligations by transferring funds from the customer’s other accounts linked to his 

transactions account

(2) Overdraft Lines of Credit

A contractual agreement between a bank and a customer that the bank is willing to lend up to a specified 

amount over a specified future period to cover overdrafted items. These programs DO NOT include line of credit

programs that do not specifically cover overdrafted items, for example, home equity lines of credit. The bank

extends the line of credit after reviewing a customer using standard underwriting criteria; the line is considered 

a loan and requires standard Truth-in-Lending (Regulation Z) disclosures

(3) Automated Promoted Overdraft Protection

A program or policy where a bank generally honors a customer’s overdrafted obligations, and customers ARE 

informed of the existence of the overdraft protection program. The program is uniformly offered to qualifying

customers. Excluded are all overdraft programs where an APR is required. The program is automated in th

sense that standardized procedures or a “matrix” is used to determine whether the NSF item qualifies for the 

overdraft protection. Automated programs are typically, but not necessarily, computerize

(4) Automated Non-Promoted Overdraft Protection

A program or policy where a bank generally honors a customer’s overdrafted obligations; however, customers 

are NOT informed of the existence of the overdraft protection program. The program is automated in the sense

that standardized procedures or a “matrix” is used to determine whether the NSF item qualifies for the overdraft 

protection. Automated programs are typically, but not necessarily, computerized

(5) Non-Automated Non-Promoted Ad Hoc Overdraft Protection

These include truly incidental and discretionary accommodations to customers by banks to honor overdrafted 

items. These decisions are made independent of or override the programs described in (1) through (4

B. Terms

Grace Period – The period of time an account holder has to bring an overdrafted account back to a positive 

balance without incurring any fees other than the initial per item/per occurrence fee

Initiation Fee vs. Maintenance Fee – An initiation fee is a one time charge to begin/establish a customer in a 

program. A maintenance fee is a recurring fee to maintain the customer in the program. It is typically a monthl

or annual fee

Overdraft Item vs. Occurrence – For example, if a customer had two bounced checks in a given day and was 

charged two separate fees, that would be considered a fee “per item.” On the other hand, if the customer was

charged one lump sum to cover both checks in the same day, that would be considered a fee “per occurrence.”

Workout Phase – When a customer cannot return an account to a positive status and works with the bank to 

develop a repayment schedule
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

Survey I 

A. Institution

Bank Name

Headquarter City

Headquarter State

Region

FDIC Certificate Number

B. FDIC

Examiner Name

Examination Type

Examination Date

Survey I Completion Date

C. Coverage

As of July 1, 2006, did the institution believe it 

was subject to the overdraft provisions of 

Regulation DD
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

I. General

A. Scope of Services 

Section IA determines to what extent portions of this survey are relevant to the institution depending on what overdraft options it 

offers or offered in 2006-2007. For questions IA1, IA2, IA3, and IA4, each “Yes” answer indicates that a subsequent subsection in 

Section II, “Program Specifics,” related respectively, to (1) linked transfer accounts, (2) overdraft lines of credit, (3) automated 

promoted overdraft protection, and (4) automated non-promoted overdraft protection, is to be completed. Please refer to page ii for

definitions for Programs (1) through (4)

1. Does the institution offer linked transfer accounts, or offered it at any point in 2006 or 2007? If yes, please answe

the questions using column (1) for all subsections of Section II. 1 = Yes, 2 = N

1.1 If the institution initiated the program within the last five years, please specify the month and year in which the

institution initiated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

1.2 If the institution terminated the program in 2006 or 2007, please specify the month and year in which the institution

terminated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

1.3 If yes to Question 1, please describe below the institution’s program.

2. Does the institution offer overdraft lines of credit, or offered it at any point in 2006 or 2007? If yes, please answe

the questions using column (2) for all subsections of Section II. 1 = Yes, 2 = N

2.1 If the institution initiated the program within the last five years, please specify the month and year in which the

institution initiated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

2.2 If the institution terminated the program in 2006 or 2007, please specify the month and year in which the institution

terminated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

2.3 If yes to Question 2, please describe below the institution’s program.

3. Does the institution offer automated promoted overdraft protection, or offered it at any point in 2006 of 2007? If yes

please answer the questions using column (3) for all subsections of Section II. 1 = Yes, 2 = N

3.1 If the institution initiated the program within the last five years, please specify the month and year in which the

institution initiated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

3.2 If the institution terminated the program in 2006 or 2007, please specify the month and year in which the institution

terminated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

3.3 If yes to Question 3, please describe below the institution’s program.

4. Does the institution extend automated non-promoted overdraft protection, or did so at any point in 2006 or 2007? I

yes, please answer the questions using column (4) for all subsections of Section II. 1 = Yes, 2 = N

4.1 If the institution initiated the program within the last five years, please specify the month and year in which the

institution initiated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

4.2 If the institution terminated the program in 2006 or 2007, please specify the month and year in which the institution

terminated the program. Please mark “NA” if not applicabl

a. Month (MM  b. Year (Y

4.3 If yes to Question 4, please describe below the institution’s program.

5. Does the institution have any other overdraft program that does not meet the descriptions of programs (1) throug

(4) described under “Definitions - A. Programs”? 1 = Yes, 2 = N

5.1 If yes, please describe below this program. 
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

I. General

B. Aggregate Income & Losses

1. For each year below, what was the TOTAL dollar amount of the institution’s total gross income from all fees related to NSF items

This includes fee income for paid overdrafted items, for returned overdrafted items, from initiation fees, and from maintenance fees

1.1 200

1.2 200

1.3 2004

1.4 2003

1.5 2002

2.* For each year below, what was the dollar amount of the institution’s total gross income from per item/ per occurrence PAID NSF

items? This excludes fee income for returned overdrafted items, initiation fees, and maintenance fees

2.1 200

2.2 200

2.3 200

2.4 200

2.5 200

3.* For each year below, what was the dollar amount of the institution’s total gross income from per item/ per occurrence

RETURNED NSF items? This excludes fee income for paid overdrafted items, initiation fees, and maintenance fees

3.1 200

3.2 200

3.3 200

3.4 200

3.5 200

4. How many deposi

accounts were charged 

off in 2006?

5. What was the tota

dollar amount of these 

charge-offs?

6. How many deposi

accounts were 

converted to workout 

loans in 2006?

7. What was the tota

dollar amount of these 

workout loans?

*Note: If data readily available
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

I. General

C. General Processing Practices

1. In what order are transactions typically paid  (Please rank beginning from “1” and mark “NA” if no

applicable.)

a. Cash transactions (e.g. teller servic

b. In-house ATM transaction

c. System ATM transaction

d. On u

e. Online payment

f. ACH

g. PO

h. Other (please describe below

2. For those items which the institution batch processes, which method best describes in what orde

transactions are typically paid? 

1 = By size, starting with largest

2 = By size, starting with the smallest

3 = By check number 

4 = By order of presentation 

5 = Other (please describe below)

3. Can an account be covered by more than one overdraft program  1 = Yes, 2 = 

3.1 Please rank, beginning from “1” or (mark “NA” if not offered), the order in which a customer’s

applicable overdraft protection programs are invoked

a. Linked Transfer Account

b. Overdraft Lines of Credi

c. Promoted Overdraft Protectio

d. Automated Non-Promoted Overdraft Protectio
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

I. General

D. Program Selection 

1. How does the institution determine which overdraft protection program to offer new customer

1 = Offers all programs available for the type of account 

2 = Uses software to determine which customers are offered which programs

3 = Offers only automated promoted overdraft protection unless other options solicited by customer

4 = Other (please describe below)

2. Does the institution provide information that allows consumers to compare the features and costs o

alternative types of overdraft protection? 1 = Yes, 2 = No 

2.1 If yes, with what means are customers informed of alternative types of overdraft protection offered

by the institution? (Mark each that applies.)

a. Deposit account agreemen

b. Brochure about account

c. Bank personnel informs customer

d. Provide information only when aske

e. Other (please describe below

3. Does the institution offer any educational information that helps customer use overdraft protectio

wisely/efficiently? 1 = Yes, 2 = No 

3.1 If yes, with what means are customers assisted in selecting an overdraft protection

program? (Mark each that applies.

a. Comparison char

b. Fee sheet

c. Example of cost

d. Overdraft protection brochur

e. Other (please describe below
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

A. Policies

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

1. Has the institution adopted written policies and procedure

to address the operational and other risks associated with the 

program? 

1 = Yes, 2 = No

1.1 If yes, does this policy set a cap on the total dollar amount

of advances per customer that the bank will extend through 

the program, which is consistent with the institution’s ability to 

absorb losses? 

1 = Yes, 2 = No

1.1.1 If yes, what is that dollar limi

1.2 What other features of the program are established in this

written policy? (Mark each that applies.

a. All associated fee

b. AP

c. The process for providing disclosures to customer

d. A timeline of customer notificatio

e. The period established to repay/bring account positiv

f. A timeline for charge-off of unpaid advance

g. Workout loan procedure

h. Other (please describe below

2. Was this program reviewed for compliance with applicabl

laws prior to implementation? (Mark each that applies.

a. Yes, by bank counse

b. Yes, by independent counse

c. Yes, by bank managemen

d. Yes, by bank boar

e. Not reviewe

f. Other (please describe below
FDIC Study of Bank Overdraft Proras  n  November 

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

B. Monitoring

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

Automated 

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

1. Does the institution maintain customer-level informatio

about usage, and fees and interest accrued under the 

particular overdraft program?

1 = Yes, 2 = No

2. How many times in 2006 did senior management evaluat

the program, including items such as reviewing overdraft 

activity, heavy usage, income and losses?

3. What best describes how the institution monitors and evaluates the performance of the program? (Mark each tha

applies.

a. Vendor provides report

b. Self evaluatio

c. Hire consultant to conduct evaluatio

d. Do not regularly evaluat

e. Other (please describe below

4. Does the institution monitor the program for extensiv

usage? 

1 = Yes, 2 = No

4.1 If yes, please describ

5. In 2006, did the institution NOT cover an NSF item for 

customer in good standing, where there were sufficient funds 

within the institution’s policy limits?

6. In 2006, how many complaints were received by the institution for the particular progra

7. Does the institution do any special monitoring of NS

Overdraft fees and activity for individual accounts largely 

funded by fixed, non-attachable income such as Social Security and VA payments?

1 = Yes, 2 = No
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

C. Information Provided to Consumers

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated 

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

1. When does the institution inform its customers of th

program? (Mark each that applies.

a. When account is opene

b. Periodically with account update

c. When asked by custome

d. Do not inform customer

e. Other (please describe below

2. What are the primary means by which customers ar

informed of the features of the program? (Mark each that 

applies.

a. Deposit account agreemen

b. Brochure about account

c. Bank personnel informs custome

d. Letter or special mailing to custome

e. Do not inform customer

f. Other (please describe below

3. Which features are customers informed of when they enrol

or are included in the program? (Mark each that applies.

a. The schedule of fees charge

b. AP

c. Which transactions are covere

d. How transactions are processed in determining

account balances and fees charged

e. The available dollar limit covere

f. Other (please describe below
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

C. Information Provided to Consumers, con’t

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated 

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

4. Do balances provided at proprietary ATM’s show the overdraft coverage limit

1 = No, the overdraft limit is not shown in any ATM balance

2 = Yes, the overdraft limit is included in the only balance 

shown 

3 = Yes, the overdraft limit is shown but listed separately 

from the actual balance

5. Do balances provided at non-proprietary ATM’s show th

overdraft coverage limit? 

1 = No, the overdraft limit is not shown in any ATM balance

2 = Yes, the overdraft limit is included in the only balance 

shown 

3 = Yes, the overdraft limit is shown but listed separately 

from the actual balance

4 = Do not know

6. When an ATM transaction results in an NSF, when is th

customer notified? 

1 = At the time of the transaction, prior to completion of the 

transaction

2 = At the time of the transaction, after the completion of the 

transaction

3 = Subsequent to the time of transaction (e.g. via custome

notification such as mail or email)

4 = Other (please describe below)
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

C. Information Provided to Consumers, con’t

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated 

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

7. When a POS transaction results in an NSF, when is th

customer notified? 

1 = At the time of the transaction, prior to completion of the 

transaction

2 = At the time of the transaction, after the completion of the 

transaction

3 = Subsequent to the time of transaction (e.g. via custome

notification such as mail or email)

4 = Other (please describe below)

8. In 2006, how many times did the institution advertise i

newspapers, radio, or television?

8.1 If the institution had print, radio, or television advertisements, how many featured the program

8.2 Of these advertisements which featured the program, how

many were primarily to promote the program or prominently 

featured the program?

9. In 2006, of all the institution’s customer mailings (includin

emails), how many primarily or prominently featured the 

program?
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

D. Fees

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

1. What is the initiation fee associated with the program

(If none enter $0.)

2. What is the maintenance fee to maintain the progra

(If none enter $0.

2.1 How often is this fee assessed

1 = Monthly

2 = Yearly

3 = Other

3. How are overdraft items charge

1 = Per item 

2 = Per daily occurrence

3 = No per item or daily occurrence fee charged

4 = Other (please describe below) 

4. Fees and interest charge

4.1 For the institution’s linked accounts and lines of credi

programs, what is the fee to transfer or advance funds?

4.2 For the institution’s lines of credit program, what is the

typical APR on the outstanding balance?

4.3 What is the highest fee charged to PAY an NSF item

4.4 What is the highest fee charged to RETURN an NSF item

5. Does the per item/occurrence fee change with the numbe

of items/occurrences with insufficient funds?

1 = Yes, 2 = No

5.1 If yes, please describe the program’s fee schedul
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

D. Fees, con’t

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted 

Ad Hoc

Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

6. How are overdraft funds typically transferred/advanced

1 = As needed to meet overdrafts

2 = As needed with a minimum draw

3 = Round lots

4 = Other 

6.1 If “Round lots” was chosen, in what denomination are the

round lots? (e.g. $50, $10

7. Once an account is overdrawn, are additional fees or interest assessed subsequent to regular per item/per occurrenc

fees for being in overdraft status?

1 = Yes, 2 = No

7.1 If yes, please describ

7.2 If yes, what is the grace period before the additional fees

are charged, in days?

8. In the context of fees, does the institution define days b

1 = Business Days, 2 = Calendar Days
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

E. Account Coverage

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts Lines of Credit

Automated 

Promoted

Overdraft 

Protection

 Automated 

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted Ad 

Hoc Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

1. For which of the following accounts is th

program offered? (Mark each that applies.)

a. Checking

b. Money Marke

c. NO

d. Saving

2. Which transactions are covered by th

program in the event of an overdraft? 

a. Paper checks/Equivalent

b. ATM withdrawal

c. Debit cards/PO

d. Electronic billpa

e. Automated debi

f. AC

g. Other (please describe below

3. Is the program

1 = Completely Opt-in 

2 = Completely Opt-out

3 = Other (please describe below)

4. In 200

4.1 How many accounts opted in to the program

4.2 How many accounts opted out of the

program?

5. What rules/procedures are used to determin

whether a customer qualifies for the program? 

(Mark each that applies.)

a. Credit chec

b. Minimum balanc

c. Age of accoun

d. History with institutio

e. Recurring deposit (e.g. direct depos

f. Other (please describe below
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

F. Vendor

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted Ad 

Hoc Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

1. Is the institution’s current overdraft progra

implemented/managed by a vendor or other third 

party? 

1 = Yes, 2 = No

If the answer to Question 1 is “Yes,” please answer the following vendor-related questions below.

2. How long has the institution used a vendorsupplied program, in months (MM)

3. What was the original term of the institution’

current contract with the vendor, in months (MM)? 

4. Which of the following best describes the institution’s program

1 = A standardized program obtained from a 

vendor (off-the-shelf)

2 = A customized program obtained from a 

vendor where the institution sets the 

program’s parameters

3 = Other (please describe below)

5. Did the institution first establish or expand it

overdraft protection program with the adoption of a 

vendor program? 

1 = Yes, 2 = No
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

II. Program Details

F. Vendors, con’t

(1) (2) (3) (4) (5)

Linked 

Transfer 

Accounts

Lines of 

Credit

Automated 

Promoted

Overdraft 

Protection

 Automated

NonPromoted

Overdraft 

Protection

NonAutomated 

NonPromoted Ad 

Hoc Overdraft 

Protection

 Complete this section if you answered “Yes” for Question:

IA1 IA2 IA3 IA4 IA5

6. Which vendor does the institution currently use

1 = Allied Solutions Group Inc

2 = Fiserv Inc

3 = Impact Financial Services

4 = Jack Henry

5 = John M. Floyd & Associate

6 = MEA Financial Services

7 = Moebs $ervices Inc

8 = Pinnacle Financial Strategies 

9 = Strunk & Associates L.

10 = Other (please list below) 

7. Does the vendor receive a percentage o

income/fees generated by the product? 

1 = Yes, 2 = No

7.1 If yes, in 2006, what share of fees (in %, e.g. 1

25) from the institution’s overdraft protection 

program was the vendor paid? 

8. Does the vendor’s compensation depend on 

minimum level of usage by bank customers? 

1 = Yes, 2 = No

8.1 If yes, please describ

9. Does the vendor’s compensation depend o

features of the program such as its fee structure or 

how transactions are cleared? 

1 = Yes, 2 = No

9.1 If yes, please describ
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix A FDIC Overdraft Survey Instrument

Comments

The space below is provided for any additional comments the institution may desire to make 

regarding its overdraft protection policies, programs and practices
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B

Micro-Level Data Request

Customer/Transactions Level Data Request

Table of Contents

Page

Download Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Download Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Program Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

I. Download I: Customer/Account List

A. Fields Requested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

B. Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

II. Download II: NSF Transactions File

Automated Promoted, Automated Non-Promoted, and Ad Hoc Overdraft Programs Only

A. Fields Requested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

B. Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Public Burden Statement

It is estimated that completing this form, including reviewing the instructions and gathering the data needed, 

takes an average of 80 hours. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to the Paper Reduction Act Clearance Officer,

Legal Division, Federal Deposit Insurance Corporation, 550 17th Street, N.W., Washington, D.C. 20429. An ag

may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it 

displays a currently valid OMB control number. This form is OMB control number 3064-0155
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Download Descriptions

The customer level data request consists of two separate downloads. They are

Download I: Customer/Account List

A complete listing of all of the customers for the institution’s transactions (e.g. checking, money market, etc

and savings accounts, for 2006 or for the time period of the NSF transactions file (described below), whichever 

time period is more appropriate. The listing should identify customers using an anonymous customer ID number

(field 2). This number should be unique to each individual holding an account or multiple accounts within the

institution. The account ID (field 3) need only be unique for each of a particular customer’s accounts. For example, Mr. John Doe may have three separate accounts within the institution. His unique ID could be “1” and 

accounts could be numbered “1,” “2,” and “3.” Ms. Jane Doe with two accounts within the institution coul

have a unique ID of “2” and her accounts numbered “1,” and “2.” No other customers of the institution,

however, should have the ID’s of “1” or “2.

Download II: NSF Transactions File

Automated Promoted, Automated Non-Promoted, and Ad Hoc Overdraft Programs Only

A complete listing of NSF transactions paid or returned under the institution’s automated promoted, automated 

nonpromoted, or ad hoc overdraft protection programs, for the customer/accounts listed in Download I, for 

calendar year 2006 or for the most recent complete 12 calendar month period, whichever is more readily available. Note that if an account had no NSF activity covered under any of these three programs during the relevant twelve month period, then the account will not appear in the Download II NSF transactions file, even

though it would be included in the “customer/account” Download I data file. Each NSF item should appear as a 

unique record in the transactions file. The NSF activity for a specific customer and account will be linked to the

Download I “customer/account” file using the anonymous customer ID number and the account ID number
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Download Instructions

1. File Naming Conventions

Download I: cust_cert_surveydate

Download II: nsf_cert_survey date

Where “cust” and “nsf” are characters as is, “cert” is the institution’s FDIC certificate number, and “surveydate” is the date Survey II was completed by the institution (YYYYMMDD). The three terms should be separated

by underscores “_”. For example, an institution’s Customer List may be named “cust_99999_20060131

2. Variable Naming

For the two data download files, please include a header row with the variable names that we provide in the 

following “Fields Requested.

3. File Format

Please provide the files in comma-delimited “.csv” format, with text fields surrounded by quote

4. Media Format

The files should be transferred to FDIC using one of two methods. The institution can use FDIC Connect to

securely transmit files sizes of up to 100MB. For institutions with larger files or who do not have access to FDIC

Connect, please provide the files on a CD or DVD media. If necessary due to large file sizes, the files may be

zipped and saved on multiple CD’s. In this case, please use an arbitrary but natural break to separate the disks,

for example, by months or by region of activity

If the data are encrypted, please provide the name of the appropriate contact person and his/her contact telephone number and email address, in order for the FDIC to obtain the necessary password to decrypt the data

Please retain a back-up copy of the data provided to the FDIC, in the event that the original data are lost in 

transit

5. Shipping Directions

Please ship the data overnight to:

The Federal Deposit Insurance Corporation

3501 Fairfax Drive

Arlington, VA 22226

Attn: P. Cashman

F6028, 202.898.6534

Please mark the envelope “Media Enclosed - Do Not X-Ray.

6. Survey Guidance

Please note that the FDIC will be conducting weekly conference calls to brief institutions on how to complete 

the Overdraft Proctection Survey II downloads before they begin their data collection processes. This will be an

opportunity to ask general questions and hear the questions that other institutions may have. Subsequent to the

general conference call, insitutions will have the opportunity to call in and receive one-on-one guidance for 

issues and questions that are particular to the institution
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Program Definitions 

(1) Linked Transfer Accounts

A contractual agreement between a bank and a customer, linking the customer’s transactions account with other 

accounts within the bank, including savings and credit card accounts. In the event of an overdraft, the bank will

fulfill the customer’s obligations by transferring funds from the customer’s other accounts that are linked to his 

transactions account

(2) Overdraft Lines of Credit

A contractual agreement between a bank and a customer that the bank is willing to lend up to a specified amount 

over a specified future period to cover overdrafted items. For the purposes of this Survey, these programs DO

NOT include line of credit programs that do not specifically cover overdrafted items, for example, home equity 

lines of credit. The bank extends the line of credit after reviewing a customer using standard underwriting

criteria; the line is considered a loan and requires standard Truth-in-Lending (Regulation Z) disclosures

(3) Automated Promoted Overdraft Protection

A program or policy where a bank generally honors a customer’s overdrafted obligations, and customers ARE 

informed of the existence of the overdraft protection program. The program is uniformly offered to qualifying

customers. Excluded are all overdraft programs where an APR is required  The program is automated in th

sense that standardized procedures or a “matrix” is used to determine whether the NSF item qualifies for the 

overdraft protection. Automated programs are typically, but not necessarily, computerize

(4) Automated Non-Promoted Overdraft Protection

A program or policy where a bank generally honors a customer’s overdrafted obligations; however, customers 

are NOT informed of the existence of the overdraft protection program. The program is automated in the sense

that standardized procedures or a “matrix” is used to determine whether the NSF item qualifies for the overdraft 

protection. Automated programs are typically, but not necessarily, computerized

(5) Non-Automated Non-Promoted Ad Hoc Overdraft Protection

These include truly incidental and discretionary accommodations to customers by banks to honor overdrafted 

items. These decisions are made independent of or override the programs described in (1) through (4
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Table IA

Download I: Customer/Account List

Fields Requested

Section

Field 

Number

Field 

Name Field Description

Institution 

& Customer 

Identifiers

1 cert

FDIC Certificate Number

This value should be the same for every record for the institution

2 cust_id

Unique Anonymous Customer ID

A customer ID, unique to each customer within the institution. Other individuals on the

Customer List should NOT have the same value as another customer. Depending on the

number of accounts the customer has within the institution, there may be multiple records for 

the same cust_id

3 acct_id

Account ID

An account ID, unique to each account held by customer. The numbering convention may

repeat across customers

4 cust_cit

Customer City

City name of the customer’s address. Do not include any commas; however city names with

more than one term may be spaced. (For example: Salt Lake City)

5 cust_st

Customer State

2 letter state postal abbreviation of the customer’s address. (For example, for California: CA

6 cust_zip

Customer 9 Digit Zip Code (XXXXXXXXX)

9 digit postal zip code of the customer’s address, with 5 digit prefix and 4 digit suffix

(For example: 112381234). This variable MUST be provided in the complete 9-digit forma

7 cust_yob

Year of Birth (YYYY)

4 digit year of customer’s birth. (For example: 1965) Note: In cases of accounts with multiple

account holders, only one instance of the account should be reported, and the birth year of 

only one account holder reported. In these instances, list the year of birth of the primary or

first listed account holder. Typically, this is the individual for which the institution has a

Social Security or Tax ID number

Account 

Profile

8 acct_dat

Date Account Opened

(YYYYMMDD) 8 digitdate of when the customer’s account was opened. Begin with year, then

month, then day, including any leading zeroes. (For example, January 1, 1990 would be:

19900101)

9 acct_typ

Account Type Choose

Choose one of the following 1 digit codes to indicate the type of deposit account: 

1 = Checking 

2 = Money Market

3 = NOW

4 = Savings

5 = Other

10 acct_cat

Account Category 

Choose one of the following 1 digit codes to indicate to which category of customer the 

account holder belongs:

1 = Consumer

2 = Commercial, Farm, Non-Profit (e.g. churches and schools), or Local, City, State, o

Federal Government

3 = Internal (e.g. official check
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Table IA, con’t

Download I: Customer/Account List

Fields Requested

Section

Field 

Number

Field 

Name Field Description

Account 

Profile, 

con’t

11 acct_spc

Special Consumer Accounts

Choose one of the following 1 digit codes to indicate whether the consumer account was 

open under a special program that the institution offers:

1 = Special Account for Military

2 = Special Account for Seniors

3 = Special Account for Students

4 = Other 1 (Self Describe)

5 = Other 2 (Self Describe)

6 = Other 3 (Self Describe)

7 = Not a Special Account

Note 1: This indicator is solely for the account, not the individual customer. For example, if a

senior opens a regular savings account, then the correct code would be “7.” However, if

she opens a savings account which is eligible only to seniors, then the correct code is “2.”

If an individual in the military has an account which is not a special account offered only to 

the military, then the account would also be coded “7” rather than a “1.

Note 2: If the institution offers other “special” consumer accounts, please use Codes 4, 5, 

and 6 and provide a separate listing of what accounts those codes represent

12 acct_ss

Social Security Benefits Recipient

Is this account specially denoted as receiving Social Security benefits?

1 = Yes

2 = No

3 = Cannot tell

13 acct_bal

Account Average Balance 

For this specific account, the dollar amount of the customer’s annual average balance in 

2006. Do not include any commas or dollar signs  (For example, an average balance o

$5,613.42 should be entered as: 5613.4
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Table IA, con’t

Download I: Customer/Account List

Fields Requested

Section

Field 

Number

Field 

Name Field Description

Overdraft 

Coverage

14 acct_lnk

Linked Transfer Accounts

Choose one of the following 1 digit codes to indicate if the customer had this type of overdraft coverage for the particular account: 

1 = Yes

2 = No

Note: An account may have more than one type of overdraft coverage

15 acct_loc

Lines of Credit

Choose one of the following 1 digit codes to indicate if the customer had this type of overdraft coverage for the particular account: 

1 = Yes

2 = No

Note: An account may have more than one type of overdraft coverage

16 acct_pod

Automated Promoted Overdraft Protection

Choose one of the following 1 digit codes to indicate if the customer had this type of overdraft coverage for the particular account: 

1 = Yes

2 = No

Note: An account may have more than one type of overdraft coverage

17 acct_np

Automated Non-Promoted Overdraft Protection

Choose one of the following 1 digit codes to indicate if the customer had this type of overdraft coverage for the particular account: 

1 =Yes

2 =No

Note: An account may have more than one type of overdraft coverage
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Table IB

Download I: Customer/Account List

Example

Institution & 

Customer ID’s Customer Profile Account Profile Overdraft Coverage

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17)

cert

cust_

id

acct_

id cust_cit

cust_

st cust_zip

cust_

yob acct_dat

acct_

typ

acct_

cat

acct_

spc

acct_

ss acct_bal

acct_

lnk

acct_

loc

acct_

pod

acct_

np

99999 1 4 Washington DC 200101234 1965 20060331 3 1 2 2 4520.00 2 2 2 

99999 1 3 Washington DC 200101234 1965 19951221 2 1 1 2 3000.00 2 2 2 

99999 1 2 Washington DC 200101234 1965 19900101 1 1 1 2 2561.27 1 1 1 

99999 1 1 Washington DC 200101234 1965 19900101 4 1 1 2 271.22 1 2 2 

99999 2 2 Indio CA 123455678 1970 19951201 1 2 1 2 1081.31 1 1 1 

99999 2 1 Indio CA 123455678 1970 19951201 4 2 1 2 352.37 2 2 2 
FDIC Study of Bank Overdraft Proras  n  November 

Appendix B Micro-Level Data Request

Table IIA

Download II: NSF Transactions File

Automated Promoted, Automated Non-Promoted, and Ad Hoc Overdraft Programs Only

Fields Requested

Section

Field 

Number

Field 

Name Field Description

Institution 

& Customer 

Identifiers

1 cert

FDIC Certificate Number

This value should be the same for every record for the institution

2 cust_id Unique Anonymous Customer ID

A customer ID, unique to each customer within the institution.

3 acct_id

Account ID

An account ID, unique to each account held by customer. Depending on the customer’s level

of NSF activity, there may be multiple records for the same cust_id/acct_id combination

Overdraft 

Activity

4 nsf_date

Date of NSF Item (YYYYMMDD)

8 digit date of the NSF item. Begin with year, then month, then day, including any leading

zeroes. (For example, January 1, 2005 would be: 20050101

5 tran_typ

Transaction Type

If electronically identifiable, choose one of the following 1 digit codes to indicate for what type 

of transaction the NSF activity was related:

1 = Paper checks/Equivalents

2 = ATM withdrawals

3 = Debit cards/POS

4 = Electronic billpay

5 = Automated debit

6 = ACH

7 = Other

6 nsf_dec

NSF Decision

Choose one of the following 1 digit codes to indicate whether the NSF item was paid or 

returned by the institution:

1 = Paid NSF

2 = Returned NSF 

7 paid_und

Paid Under This Overdraft Program

Choose one of the following 1 digit codes to indicate under what overdraft program the NSF 

item was paid:

1 = Automated Promoted or Automated Non-Promoted Overdraft

2 = Ad Hoc and/or Paid Outside of Program Parameters

3 = NSF Item Not Paid

Note: If the answer for Field Number 6 is “2,” the NSF item was returned, then the answer to 

Field Number 7 should always be “3,” the NSF item was not paid

8 nsf_fee

Applicable Fee for NSF Item

The dollar amount of the fee applicable for the NSF item. This is the dollar amount of the fee

that should apply to this NSF. Do not include any commas or dollar signs  (For example, a fe

of $20.50 should be entered as: 20.5

9 nsf_waiv

NSF Fee Waivers

Choose one of the following 1 digit codes to indicate whether any fee was waived or refunded 

in relation to the NSF item:

1 = Fee Waived or Refunded

2 = Fee Not Waived nor Refunded

10 nsf_amt

$ Amount of NSF Item

The dollar amount of the NSF item. Do not include any commas or dollar signs  (For example

an NSF item of $213.12 should be entered as: 213.1
FDIC Study of Bank Overdraft Proras  n  November 2

Appendix B Micro-Level Data Request

Table IIB

Download II: NSF Transactions File

Automated Promoted, Automated Non-Promoted, and Ad Hoc Overdraft Programs

Example

Institution & Customer ID’s Overdraft Activity

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

cert cust_id acct_id nsf_date tran_typ nsf_dec paid_und nsf_fee nsf_waiv nsf_amt

99999 1 2 20050101 1 1 1 20.00 2 20.

99999 1 2 20050102 2 1 1 20.00 2 100.

99999 1 2 20050103 1 1 2 20.00 2 151.

99999 1 2 20050104 5 2 3 20.00 1 50.

99999 2 1 20051201 3 1 1 20.00 2 200.

99999 2 2 20051201 1 2 3 20.00 2 1000.