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BofA ending overdraft fees on debit cards
A view shows a Bank of America branch in Charlotte, North Carolina January 19, 2010.
Credit: Reuters/Chris Keane
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)
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.
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
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!
If the Bank approved an overdraft, the customer was given “credit”. Here is an idea, balance your checkbook and don’t go below $0//no NSF fees charged. Get over it Mr. Dana.
The reason Bank of America has decided to do this is that it is now required to by law.
BofA may not have been the best bank in the USA…but…This is certainly a welcome move. It is nice to see a large bank (especially a bank) terminate at least one of its ways of taking advantage of the stupidity of the masses. In fact, this move may be better than we realize. Gosh, if some of those people get their transactions dis-approved, maybe they will learn to think next time? It could happen, especially if other banks joined in.
This is bad reporting. A new rule by the Federal Reserve Board, Regulation E, provides that, on July 1, 2010, all overdraft protection schemes are to be opt-in only, rather than opt-out.
These overdraft charges that BofA is saying they will no longer charge, it is not because they are trying to be good to their customers, it is because Federal law will mandate that they can no longer do so.
Please revise this story and stop facilitating this PR spin by Bank of America.
I just got charged $34.00 for a $.01 overdraft that was caused by The Bank of the Worst, err, West misstating my available balance, yes I paid my $25.97 electric bill, according to mistaken them with a balance of $25.96, and they charged me, e mail no joy, gonna call my branch manager Wednesday as the account had over $1K deposited the day before, the online system is designed to just to wear you down
Following up on my previous comment, here’s the press release from the Federal Reserve announcing the new regulation:
http://www.federalreserve.gov/newsevents/press/bcreg/20091112a.htm
“The Federal Reserve Board on Thursday announced final rules that prohibit financial institutions from charging consumers fees for paying overdrafts on automated teller machine (ATM) and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.”
