Bank of America will reduce – but not eliminate – overdraft fees for 63 million customers, the biggest step by a major bank to roll back expensive penalties that have attracted increasing scrutiny from regulators. management agency.
In May, the country’s second-largest bank will cut its overdraft service fee from $35 to $10, it said in a statement. statement on Tuesday. That fee is charged when the transaction exceeds the account balance and the bank will cover it, allowing the payment to be made. The bank will also eliminate the $12 fee for transferring funds from a linked account to an overdraft account.
Starting next month, Bank of America will eliminate insufficient funds charges, such as bounced checks, and will prevent customers from being able to overdraw their accounts at ATMs.
Customers will still be able to deposit their account in the red with other transactions, such as recurring or automatic payments or checks, subject to a $10 fee.
Some customers still want occasional access to overdraft services, said Holly O’Neill, Bank of America’s president of retail banking, in an interview Tuesday. “Just eliminating or preventing customers from using overdrafts is not the solution, so that’s really why we continue to maintain access to our customers to overdraft at lower fees. much,” she said.
Banking regulators have targeted overdraft operations in recent months. Rohit Chopra, director of the Consumer Financial Protection Bureau, said many lenders have become “cracked into overdraft fees” to feed their profits. The editor of the act of currency, Michael J. Hsu, has speak fees disproportionately affect vulnerable customers.
Bank of America’s plan is the most aggressive of the largest, but the smaller banks have gone further: Capitalize one and Ally Financial eliminated the overdraft fee last year. Some lenders have introduce less punitive alternatives fees, like grace periods or small short-term loans.
JPMorgan Chase, the country’s largest bank, said last month that it plans to give overdraft customers an extra business day to raise their balances within the $50 “overdraft zone” to avoid being charged. fee. Even before Tuesday’s announcement, Bank of America was offering customers a limited loan of up to $500 that must be repaid in three months.
Bank of America consulted with community groups including the Responsible Lending Center as it developed new policies.
Mike Calhoun, chair of the advocacy group, said: “This is a very powerful program, creating all the boundaries, barriers and support people need to get through a cash crunch. will continue to reach many working families,” said Mike Calhoun, president of the advocacy group, in an interview.
The group promoting financial justice has called on all banks to eliminate overdraft fees.
“Families of color are more likely to be charged an overdraft fee, even though they have fewer bank accounts than other customers,” said Mr. Calhoun. Since overdraft fees are the leading cause of involuntary account closures, minorities are more at risk of being pushed out of the mainstream financial system, he added.
US banking industry revenue from overdraft and underfunding was $15.47 billion in 2019, according to a December estimate from the consumer agency. JPMorgan, Wells Fargo and Bank of America brought in 44 percent of fees that year to banks with more than $1 billion in assets, the office said.
Bank of America declined to say how much it earns from overdraft fees. Ms. O’Neill said that overdraft fees make up less than 1% of total revenue, and the company says the changes will reduce overdraft fee revenue by “hundreds of millions of dollars”. In the third quarter, the bank’s total revenue was 22.8 billion dollars.
https://www.nytimes.com/2022/01/11/your-money/bank-of-america-overdraft-fees.html Bank of America will cut overdraft fees