Overdraft charges reduced, insufficient funds penalties eliminated
Not having enough money in your account won’t cost you as much if you’re a Bank of America customer. The bank has announced it cutting overdraft fees from $35 to $10 and became the latest financial institution to eliminate fees for insufficient funds when customers bounce checks or have autoptic payments set up. Once the changes take effect, Bank of America will have eliminated 97% of fees compared to 2009 levels.
“Over the last decade, we have made significant changes to our overdraft services and solutions, reducing clients’ reliance on overdraft, and providing resources to help clients manage their deposit accounts and overall finances responsibly,” president of retail banking Holly O’Neill said in a statement. “Throughout the process we have engaged our National Community Advisory Council (NCAC) for their guidance and feedback on our changes. These latest steps will further support our clients and empower them to create long-term financial wellness.”
Capital One said in December that it is eliminating overdraft and insufficient funds fees, and Bank of America’s move seems to be part of a wave of changes from large banks as they respond to the disruption fintechs have brought to the banking market. JPMorgan Chase said in December that it eliminated the insufficient funds fee and increased the amount by which customers could overdraw accounts before incurring a fee after receiving congressional scrutiny.
Banks took in more than $15 billion in overdraft fees in 2019, the Consumer Financial Protection Bureau said. Now, they’re finding the need to reduce or eliminate those fees to avoid losing customers to online financial services that attract customers with the promise of no fees and other trappings of traditional banking.
“This is the final step in the journey we’ve been on,” O’Neill told the Associated Press. “We have good financial solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed.”