BofA ending overdraft fees on debit cards

NEW YORK/CHARLOTTE, North Carolina Tue Mar 9, 2010 10:17pm EST

A view shows a Bank of America branch in Charlotte, North Carolina January 19, 2010. REUTERS/Chris Keane

A view shows a Bank of America branch in Charlotte, North Carolina January 19, 2010.

Credit: Reuters/Chris Keane

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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)

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Comments (21)
MrDana wrote:
It’s about time. Banks reap big rewards without warning the customer prior to completing the transaction that in doing so fees will be assessed. The banks should have given the customer the option of using credit to avoid the fees. We all know that now new fees will be added somewhere to make up for this bank loss of income.

Mar 09, 2010 9:34pm EST  --  Report as abuse
kidsdesk wrote:
Good for Bank of America. Balancing is a hard act for many Americans right now and this will help reduce the costs to consumers who can’t budget.

Mallory,
https://www.kidsdesk.net

Mar 09, 2010 9:37pm EST  --  Report as abuse
jackmarc757 wrote:
Too little too late!Bank of America has turned out to be one of those BAD banks,and I prefer not to deal with them anymore.Make the right choice,find a good bank or credit union!

Mar 09, 2010 9:43pm EST  --  Report as abuse
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