Nashville, TN

Regions Joins Banks Limiting Overdraft Fees

Advocate Andy

Move Follows Industry Trend of Fee Reduction

Birmingham-based Regions Bank announced this week it will soon eliminate non-sufficient funds fees and reduce overdraft charges. The move comes amid a flurry of banks taking steps to make banking more consumer friendly.

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In the announcement, Regions specifically highlighted the following forthcoming policy changes:

  • Overdraft Protection Transfer Fees: These fees will be eliminated by the end of the first quarter of 2022. Such fees are incurred when money is transferred from linked accounts to cover overdrafts.
  • Eliminating Non-Sufficient Funds Fees: By the end of the second quarter of 2022, Non-Sufficient Funds Fees, also known as Returned Item Fees, will no longer be charged.
  • Lowering Caps on Overdraft Fees: Also by the end of the second quarter, Regions will further reduce the number of Paid Overdraft Item Fees that can be charged per day on consumer banking accounts — including personal1 checking, money market, and savings accounts — as well as non-analyzed business checking, money market, and savings accounts. The new limit on Paid Overdraft Item Fees will be three per day.

These changes should work to reduce the total number of fees charged to customers. It should be noted that these changes will still allow Regions customers to be charged fees for up to three items per day.

The move by Regions and other banks comes at a time when regulators such as the Consumer Financial Protection Bureau (CFPB) are exploring action 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.”

Consumer groups such as the National Consumer Law Center (NCLC) are applauding the moves while highlighting the harms to consumers caused by a reliance on such 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.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

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