By Vicki Needham - 05/18/10 03:46 PM EDT
Consumers will save billions in fees under new credit card and overdraft restrictions going into effect this year, potentially propelling spending and fueling the economic recovery.
The nation's largest banks and credit card companies will forgo at least $5 billion in fees this year, according to an analysis released by USA Today.
Seven of the top 10 financial institutions with the largest amount of credit card receivables provided estimates of how the law will affect them. The issuers — Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, U.S. Bancorp, HSBC North America and Barclays Group US — will lose between $2.5 billion and $3.1 billion in fees this year. Also, seven of the top 10 depositary institutions expect to forgo between $2.4 billion to $2.6 billion under new overdraft rules and policy changes, according to analyses.
New rules to curb rising overdraft fees and unchecked credit card interest rate increases are going into effect this year behind a new law and Federal Reserve action to get a handle on unfair overdraft charges.
Consumer spending was up 3.6 percent in the first quarter of 2010, according to various estimates.
R.K. Hammer Investment Bankers estimates that institutions will lose about $10 billion in revenue per year because of the new law. Moebs Services predicts that the industry's overdraft revenue will shrink by $1.9 billion, to $35.2 billion this year.