Bank of America slashes fees for account overdrafts

2 years ago 363

NEW YORK – Bank of America is slashing the magnitude it charges customers erstwhile they walk much than they person successful their accounts and plans to destruct wholly its fees for bounced checks.

It's the latest determination by the nation's biggest banks to rotation backmost the overdraft fees they agelong charged customers, fees that often magnitude to hundreds of dollars a twelvemonth for predominant overdraft users.

The slope based successful Charlotte, North Carolina, volition chopped the overdraft fees it charges customers to $10 from $35 starting successful May. It volition besides halt charging fees for non-sufficient funds — which are levied erstwhile it rejects a transaction — amended known arsenic bouncing a check.

While checks are nary longer wide used, NSF fees tin travel from automated payments similar inferior bills. Bank of America, the nation’s second-largest bank, says astir 25% of its overdraft/NSF interest gross each twelvemonth came from NSF fees.

Altogether, Bank of America estimates the steps volition chopped its overdraft-fee revenues by 97% from wherever they were successful 2009, the twelvemonth earlier it started taking incremental steps toward reining successful overdraft-fee revenues.

“This is the last measurement successful the travel we've been on," said Holly O’Neill, president of retail banking astatine BofA, successful an interview. "We person bully fiscal solutions for clients without them having to trust connected overdraft, but we volition inactive person overdraft if it is needed.”

For years, it was communal that 1 ample slope would summation the interest it was charging for overdraft, which would origin different banks to respond successful kind. It remains to beryllium seen whether the determination by BofA — a person successful the retail banking manufacture — to chopped overdraft fees volition unit different banks to instrumentality akin measures.

The slope is besides eliminating 2 smaller fees arsenic well. It volition nary longer let customers to overdraft their accounts astatine the ATM and volition destruct a $12 interest it charged customers erstwhile the slope automatically moved wealth from 1 relationship to different to screen an overdraft, often moving wealth from a semipermanent savings relationship into the customers' superior checking.

Overdraft has its origins successful banks providing a work for a interest to customers who whitethorn person not balanced their checkbook correctly and wanted a slope to grant a purchase. But the wide usage of debit cards changed this courtesy into a regular root of gross for banks. If a lawsuit lacked funds successful their account, a $5 java could extremity up costing $35 due to the fact that of overdraft fees.

Overdraft fees became lucrative for the manufacture but astatine the aforesaid clip made banks a people for user advocates and regulators. After the fiscal crisis, Democrats enactment the Consumer Financial Protection Bureau and different regulators successful complaint of reining successful overdraft interest revenue.

For years, BofA has dilatory chopped backmost connected its overdraft interest practices. It got escaped of overdraft fees tied to debit paper purchases successful 2010 and created a checking relationship successful 2014 that did not let customers to overdraft. The SafeBalance relationship is present the bank's astir commonly opened account.

But BofA and the broader manufacture were not acceptable to get escaped of overdraft fees altogether until recently. Many banks froze the fees they charged customers during the archetypal twelvemonth of the pandemic and manufacture inactive booked grounds profits.

So starting successful 2021, immoderate larger banks started announcing they were dropping overdraft fees entirely. Ally Bank, PNC, Santander and Capital One were among the bigger determination banks to efficaciously destruct overdraft fees.

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