Banks and credit unions generate $17.5 billion in fees every year off the overdraft loans we get when we spend more than we have in our checking accounts. That&39;s the key finding of a report released today by the nonprofit, nonpartisan Center for Responsible Lending (CRL). Another key finding is that the overdraft systems lenders use are designed to generate yet more overdrafts, leading to yet more income for the banks and credit unions.

In fact, they bring in more in fees than the $15.8 billion a year in overdraft loans we take out. That&39;s the equivalent of 117% in interest for lenders! As if that weren&39;t bad enough, there&39;s another alarming finding from CRL&39;s study, which is called, "Out of Balance." Debit card overdrafts are now the single largest source of overdraft fees. Think about this the next time you whip out your debit card to buy a widget. If you&39;re not sure of your balance, you could end up buying one widget for yourself and another one – or more – for your banker. 

Here are some of the specific bank practices that CRL found lenders using to rake in more bucks because we&39;re not good bookkeepers:

• They post charges against our checking accounts promptly, "while intentionally delaying the posting of deposits."
• They pay our bigger ticket bills first so they can lower our balances faster.
• They no longer warn us when we&39;re about to go into the red, even when it would be easy for them to do so, say when we&39;re using an ATM. "Most banks gave these warnings in the past," says CRL, "and customers want them and would most often decline transactions that were not covered if given proper warning."

Along with other consumer advocacy organizations, CRL is in support of  HR 946, a bill before Congress which would make these loans subject to Truth-in-Lending Act interest rate disclosures, require lenders to warn customers before an overdraft loan is needed, and stop the hanky-panky banks use to increase their income from overdrafts. It&39;s easy to lend (hehe) your support by writing to your Congressperson. The money you save will be your own! 

If you have an overdraft horror story, please share it with us. And if CRL and CreditBloggers.com have motivated you to better manage your checking account, let us know that, too.