Eliminating 'predatory' bank fees and overdraft penalties actually only improves the financial health of the wealthy, leaving the poor just as stressed.
March 31, 2026
Original Paper
Bank Fees and Household Financial Well-Being
SSRN · 6493139
The Takeaway
A study of large-scale policy changes between 2017 and 2022 revealed that 'progressive' fee reforms were captured almost entirely by high-income, high-liquidity households. Vulnerable households saw no significant reduction in financial stress or their reliance on payday loans, suggesting that simple fee-cutting failed to reach its intended targets.
From the abstract
In this study, we examine policy changes from large U.S. banks between 2017 and 2022, which eliminated non-sufficient funds (NSF) fees and relaxed overdraft policies. Using individual transaction-level data, we find that the elimination of NSF fees, not surprisingly, resulted in immediate reductions in NSF charges across the income distribution. However, relaxing overdraft policies resulted in reductions in overdraft fees only for wealthier households, along the dimensions of income and liquidit