Laredo-based IBC bank is a national outlier on consumer overdraft fees. Its CEO has no...
Thinking about overdraft fees prompted our columnist to revisit his favorite financial comedy from Louis CK.A free checking account sounds good, right? One of the ways banks offer them is by charging hefty fees — usually $35 — to customers who bounce checks or, in banking terms, “incur overdraft fees for insufficient funds.”
. While most banks earn from 5 percent to 10 percent of their non-interest income from these fees, IBC showed up as an absolute outlier for deriving profits from these fees. Its Oklahoma-based banks earn 37 percent of non-interest income from overdraft fees, while its Texas-based entity earns 25 percent this way.
When Nixon refers to big banks reducing overdraft fees for “political reasons,” he means pressure from the Consumer Financial Protection Bureau and elected officials such as U.S. Sen. Elizabeth Warren who have called out banks for the fees.So they charged me, they charged me $15. That’s how much it costs to only have $20. And here’s the f-ed up part. Now I only have $5.
IBC’s Nixon rejects the idea these fees are either unfair or predatory on society’s most vulnerable. His bank’s internal research shows the poorest people are not the biggest users, middle-income customers are. That’s because it’s convenient and acts as a substitute for a line of credit.Also, customers who opt in to a free checking account have chosen the product — which happens to come with a $35 fee for any overdraft — of their own free will.
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