Nearly 25% of low-income households in the United States are unbanked. High fees are often cited as a reason they remain unbanked, leading some to believe that limiting bank fees would improve financial inclusion. We use the federal preemption of state limits on overdraft fees to study the impact of fee ceilings on low-income households. After preemption, national banks raise overdraft fees relative to state-chartered banks in affected states, consistent with ceilings binding. Banks in affected states also provide more overdraft credit, bouncing a smaller share of checks following preemption. The share of low-income households that are unbanked decreases, consistent with price ceilings causing the rationing of banking services.
Dlugosz, Jennifer L., Brian T. Melzer, and Donald P. Morgan, Who Pays the Price? Overdraft Fee Ceilings and the Unbanked.