South Florida Sun-Sentinel (Sunday)
Overdrawn in America
Report shows serious overdrafters not necessarily poor
The 47-page federal indictment of Rep. Duncan Hunter, R-Calif., and his wife, alleging the illegal use of over $250,000 in campaign funds to pay for personal expenses, contains many gobsmacking details. Among them: Hunter and his wife allegedly “overdrew their bank account more than 1,100 times in a seven-year period,” resulting in $37,761 in overdraft and insufficient-funds fees.
That works out to significantly more than 150 overdrafts per year, 13 overdrafts per month and about 3 overdrafts per week, every single week, for a period of seven years.
Data from the Consumer Financial Protection Bureau suggest that chronic overdrafters such as the Hunters aren’t common.
Last August the bureau released a report on frequent overdrafters, which includes the subset of “very frequent” overdrafters who incur more than 20 overdraft or non-sufficient fund notices in a given year.
Though it’s worth noting that the Hunters were incurring overdraft and NSF notices at a rate nearly eight times the threshold to be considered a very-frequent overdrafter, the CFPB’s report sheds some light on the broader universe of frequent overdrafters. It also contains findings about who these account holders are and what their finances look like.
For starters, overdrafts and NSF notices are relatively uncommon. Twothirds Rep. Duncan Hunter and his wife, Margaret, allegedly overdrew their bank account more than 1,100 times in seven years.
of the consumer accounts studied by the CFPB in 2011 and 2012 incurred no overdrafts or NSF notices in a given year. At the other end of the scale, veryfrequent overdrafters made up fewer than 5 percent of all accounts, yet they incurred more than 63 percent of all overdraft and NSF fees.
Very-frequent overdrafters have a number of things in common, according to the report. They typically have about $276 in their accounts on any given day, much less than the median balance of $1,585 among account holders with no annual overdrafts.
They do a lot of debit-card transactions in a typical month — a median of 29.1, compared with just 4.6 among the zero-overdraft group. They’re less likely to have an active credit card, and if they do it’s more likely to be maxed out — the median amount of credit available to very frequent overdrafters is $225, compared with more than $14,000 for the zero-overdraft group.
The typical very-frequent overdrafter has more money going into their account ($2,554 a month) than any other group, including occasional overdrafters ($1,816 a month)
and never overdrafters
($2,093). This suggests that many people facing overdraft difficulties aren’t necessarily poor.
Whereas very-frequent overdrafters live in neighborhoods with slightly lower median incomes
($54,265) than, say, never overdrafters ($59,832), those differences aren’t as large as you might expect.
According to the DOJ indictment and personal financial-disclosure forms, many of these financial characteristics applied to the Hunter family. “Their credit cards were frequently charged to the credit limit, often with five-figure balances,”
according to the indictment.
The indictment also describes numerous instances where the balances in the Hunters’ bank accounts hovered close to zero. At one point in 2010, Hunter is alleged to have used $41.75 in campaign funds to make purchases at a 7-Eleven while he had just 6 cents in his account. During a January 2010 vacation to Nevada, the Hunters incurred six insufficient-funds fees totaling $198; Hunter’s personal bank-account balance was $15.02 at the time. The Hunters spent over $1,000 in campaign funds to pay for that trip, according to the indictment.
The Hunters maintained their precarious financial position for years, the indictment alleges, despite Hunter’s congressional salary of $174,000. With an estimated net worth of negative-$387,000, Hunter is in fact one of the poorest members of Congress, according to an analysis of his
2015 financial-disclosure forms by the Center for Responsive Politics. The couple pleaded not guilty Thursday in San Diego to charges they illegally used his campaign account for personal expenses, The Associated Press reported.
The difference between the Hunter family and the typical frequent overdrafter is that the Hunters had access to Duncan Hunter’s campaign account, which the indictment alleges they used for personal expenses for many years. That evidently allowed the family to maintain a semblance of financial stability despite incurring tens of thousands of dollars in bank penalties — penalties that would cripple a typical family.
On May 1, 2011, Hunter warned during debt-limit negotiations that “America can no longer afford to borrow and spend its way to prosperity” and that “Washington doesn’t have a revenue problem. It has a spending problem.”
That summer, the Hunters incurred so many NSF fees during a trip to Las Vegas that Duncan Hunter’s parents had to deposit money in their account. The Hunters ultimately paid for that vacation with campaign funds, according to the indictment.