How an attention-drawing survey reduced overdraft fee expenditures by 3.7%
Abstract
As banks shift from monthly fee structures to service fee structures (like ATM or overdraft fees), industry reports estimate that annual overdraft revenue has risen to 75% of explicit deposit account revenue and 6% of total net operating revenue.1 That adds up to an overdraft fee total of $30-40 billion paid annually and, roughly speaking, averages $150 per year per chequing account. Limited customer attention is often the given explanation for this recent skyrocketing of overdraft fees.
Researchers designed and monitored a nudge over four years to determine to what extent overdrafts are affected by shocks to chequing account holders’ attention. They distributed a financial literacy questionnaire— comprising overdraft-related questions—to a pool of participants. Its findings reflected a significant, immediate effect on behaviour among the participants: within a month of taking the survey, participants showed an estimated 3.7% reduction in probability of incurring overdraft fees.
