Change Comes as Fee Reform Sweeps Industry
Bank of America announced today it is significantly reducing overdraft fees and eliminating non-sufficient funds fees, with the reforms starting in February.
“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,” said Holly O’Neill, President of Retail Banking, Bank of America. “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.”
The policy changes mean all NSF fees will be eliminated in February and the fee for overdrafts will be reduced from $35 to $10 starting in May.
The move by Bank of America comes following a decision by Capital One to end overdraft fees altogether.
Additionally, as American Banker reports, JPMorgan Chase is making some key changes to its overdraft fee policies:
JPMorgan Chase announced a pair of changes that figure to impact its overdraft-fee revenue. Starting next year, the largest U.S. bank by assets will give customers an extra business day to avoid overdraft fees and will make direct-deposited payroll funds available up to two business days early.
Meanwhile, the Consumer Financial Protection Bureau (CFPB) has announced it plans to consider new regulations on overdraft fees.
“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” said CFPB Director Rohit Chopra. “We will be taking action to restore meaningful competition to this market.”
Groups like the National Consumer Law Center (NCLC) continue to highlight the harms caused by overdraft fees.
“Overdraft and NSF fees are one of the leading reasons that people are unbanked, either because past overdrafts put the consumer on an account screening list that prevents them from opening new accounts, or because the fees make it too costly to maintain an account,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.