Bank accounts are critical to participation in the financial mainstream and to financial well-being. But for individuals and families struggling to make ends meet, bank accounts come with pitfalls or are simply inaccessible. Overdraft and nonsufficient funds (NSF) fees can drain money that people need for rent, food, and medical expenses.
Banks and credit unions earn a substantial amount of revenue from overdraft and NSF fees – over $12 billion in 2025. Abusive overdraft and NSF fee practices fall most heavily on economically disadvantaged households, with Black and Latino households more likely to incur overdraft fees than white households. Banks make most of their overdraft and NSF fee income from a small portion of accounts. Thus, bank profits derive primarily from the households that can least afford the fees and exacerbate longstanding racial injustices.
This report outlines the need for strong reforms, identifies lesser measures that can also limit the destructive impact of overdraft and NSF fees, and calls on states to enhance a core component of family financial stability by making overdraft and NSF fee reform a priority.
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