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Bank of America cuts down fees for account overdrafts

Wednesday 12 January 2022 15:23 CET | News

Bank of America has slashed the amount it charges customers when they spend more than they have in their accounts and plans to eliminate entirely its fees for bounced checks, according to US News.

It's the latest move by the nation's biggest banks to roll back the overdraft fees they long charged customers, fees that often amount to hundreds of dollars a year for frequent overdraft users. The bank based in Charlotte, North Carolina, will cut the overdraft fees it charges customers to USD 10 from USD 35 starting in May 2022. It will also stop charging fees for non-sufficient funds — which are levied when it rejects a transaction — better known as bouncing a check.

While checks are no longer widely used, NSF fees can come from automated payments like utility bills. Bank of America says roughly 25% of its overdraft/NSF fee revenue each year came from NSF fees. Overdraft fees typically come when someone makes a purchase on a debit card that exceeds the available cash in their account.

Altogether, Bank of America estimates the steps will cut its overdraft-fee revenues by 97% from where they were in 2009, the year before it started taking incremental steps toward reining in overdraft-fee revenues.

It remains to be seen whether the decision by BofA to cut overdraft fees will pressure other banks to take similar measures.

The bank is also eliminating two smaller fees as well. It will no longer allow customers to overdraft their accounts at the ATM and will eliminate a USD 12 fee it charged customers when the bank automatically moved money from one account to another to avoid an overdraft, often moving money from a long-term savings account into the customers' primary checking.


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Keywords: Bank of America, banks, retail banking
Categories: Banking & Fintech | Payments General
Countries: United States
This article is part of category

Banking & Fintech