Most Americans Unaware of Impending Regulatory Changes Regarding Overdrafts

New York, N.Y. – May 20, 2010 – While much has been written in the press about impending changes to the laws regarding the fees associated with bank-provided overdrafts, these messages are not getting through to most consumers. Only one-quarter (27%) of consumers claim to know all about the new regulations. Most have just heard a little (37%) or never heard of the changes (36%), meaning the banks still have work to do with their customers. This general lack of awareness of overdraft fees probably derives from the fact that only one in five Americans (19%) report having ever overdrawn their account within the past year.

These are some of the findings of a new Harris Poll survey of 2,755 U.S. adults, surveyed online between April 12 and 19, 2010 by Harris Interactive.

Only 29% report that they are likely to opt-in for the fee-based service under the new rules. Half (51%) are not likely to opt-in, while 20% of those with an ATM or debit card say they still need more information to be able to decide. Married women are more likely than single women to opt-in (31% vs. 23%) and households with children are also more likely than those without to do so (35% vs. 27%). This probably reflects the notion of married and harried households, which would be more likely to pay for convenience-related services.

Attitudes towards banks

There is a sense of ill will towards banks. Over two-thirds (68%) believe that banks have been taking advantage of their customers by charging fees without getting explicit consent to do so. Having some of this overdraft protection in place may help. Over half of those with ATM or debit cards (57%) would like to have the ability to decide on the spot whether to overdraft or not, based on the situation and the nature of the transaction. This type of banking flexibility goes a long way toward making customers feel as if the bank cares about them.

So what?

Consumer sentiment is largely negative in the banking industry as a whole. There is a need to focus efforts on rebuilding trust and building connection with customers. Transparency is key.

In general, the trend is that consumers are willing to remain with their existing banks but many are seeking a more local experience where they feel appreciated and secure in the service they are getting. Again, an opportunity to build a stronger connection exists here but banks have to be willing to make the commitment to do so.

Willingness to opt-in to overdraft agreements is lukewarm for most segments of the population; however, consumers are not averse to discussing alternative options. On-the-spot approval of overdrafts is enticing for many consumers, as are alternative agreements that help customers manage their finances more effectively.


TABLE 1

CHANGING REGULATIONS ON OVERDRAFTS

Historically, when a customer used their ATM or debit card and their account did not have enough money to pay for the transaction, banks would approve the transaction, create an overdraft, and then sometimes charge a fee for the overdraft service. New regulations now require that customers sign an agreement on a yearly basis to permit the bank to approve these types of ATM or debit card transactions. Unless the customer has ‘opted-in’ to the service in advance, when an account has insufficient funds, the transaction will be denied. Were you aware that regulations were changing with respect to overdrafts on electronic transactions from bank accounts?

Base: Adults with a bank account

Total

%

Know all about it

27

Heard a little about it

37

Never heard of it

36

Note: Percentages may not add to 100% due to rounding

 

 

TABLE 2

OPT-IN TO OVERDRAFT AGREEMENT

Under the new laws you can opt-in to allow your bank to automatically approve overdrafts when you have insufficient funds. There would be a fee and you could opt-out at any time. How likely do you think you will be to opt-in to the overdraft agreement?

Base: Adults with an ATM or debit card

Total

Marital Status

Children in HH

Single Women

Married Women

Children in HH

No Children in HH

%

%

%

%

%

Likely (NET)

29

23

31

35

27

Extremely likely

5

4

4

6

4

Very likely

9

5

12

12

8

Somewhat likely

15

15

15

16

15

Not likely (NET)

51

52

45

41

56

Not very likely

17

18

16

13

20

Not at all likely

34

34

29

28

36

Not sure – I would need more information

20

25

23

24

18

Note: Percentages may not add to 100% due to rounding

 


 

TABLE 3

PERSONAL OVERDRAFT HISTORY

In the last 12 months have you made an ATM withdrawal or debit card purchase for more money than you had in your account?

Base: Adults with a bank account

Total

%

Yes (NET)

19

Yes, but there were no overdraft fees.

6

Yes, and there were overdraft fees.

12

No (NET)

77

No, but I knew that my bank would overdraft my account if I did not have enough funds.

48

No, I was not aware that my bank would automatically overdraft my account.

16

Not sure

13

Note: Percentages may not add to 100% due to rounding

 

 

 

TABLE 4

PERSPECTIVES ON OVERDRAFT SERVICES AND REGULATIONS

Below are some possible perspectives on the overdraft service and upcoming regulations. Please tell us how well these describe your opinions on the subject.

Base: Adults with a ATM or debit card

Agree

(NET)

Strongly Agree

Somewhat Agree

Neither Agree Nor Disagree

Disagree

(NET)

Somewhat Disagree

Strongly Disagree

%

%

%

%

%

%

%

I feel that banks have been taking advantage of their customers by charging fees without getting explicit consent to do so.

68

39

29

18

13

7

6

I’d like to have the ability to decide on the spot whether to overdraft or not based on the situation and the nature of the transaction.

57

29

28

27

16

7

9

I feel that the automatic overdraft service is a valuable service that banks offer.

39

10

28

31

31

14

17

I am reassured knowing that if I run out of funds, the bank will automatically overdraft to cover the transaction.

36

11

25

32

32

13

19

I am concerned that the overdraft service will make it too easy for me to spend more than I can afford.

31

14

17

23

46

14

32

Note: Percentages may not add to 100% due to rounding

 


Methodology

This Harris Poll was conducted online within the United States between April 12 and 19, 2010 among 2,755 adults (aged 18 and over). Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Where appropriate, these data were also weighted to reflect the composition of the adult online population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words margin of error as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated.

These statements conform to the principles of disclosure of the National Council on Public Polls.

The results of this Harris Poll may not be used in advertising, marketing or promotion without the prior written permission of Harris Interactive.

J38067

Q765, 770, 775, 780

The Harris Poll ® #68, May 20, 2010

By Sandy Brumley, Vice President Financial Services Research Group Harris Interactive

 

 

About Harris Interactive

Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us – and our clients – stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.