BofA ending overdraft fees on debit cards
NEW YORK/CHARLOTTE, North Carolina
NEW YORK/CHARLOTTE, North Carolina (Reuters) - Bank of America said on Tuesday it will no longer charge overdraft fees on debit card purchases as of this summer, a move that may cost millions in fee income.
The change will eliminate one of the most common overdraft charges for Bank of America customers.
More than 60 percent of all overdraft fees charged by the bank are for debit card transactions, company spokeswoman Anne Pace said.
The move is the second major change in the largest U.S. bank's overdraft policies, and will affect the largest debit card network in the country.
The first change, in September 2009, curbed the number and amount of overdraft charges customers could receive in a given day.
Under the latest move, customers will simply be declined if they try to make purchases with debit cards without having adequate funds in their checking accounts.
Pace said the move comes after months of customer research and consultation with consumer advocates.
Customers said they would prefer to have a transaction declined, than have the bank allow them to spend money that was not in their accounts, Pace said.
Overdraft fees have been a hot button issue with consumers and politicians alike, with the U.S. Congress debating last Fall legislation to curb such fees.
The bank did not have an immediate projection for what the changes will cost the bank in fee income.
The changes won't take effect until third quarter, with a reduction in fee income to accelerate in fourth quarter 2010.
After the first round of changes took hold in fourth quarter 2009, overdraft fee income dipped by $160 million, the bank reported on January 15.
(Reporting by Ransdell Pierson and Joe Rauch; editing by Carol Bishopric)