Banks have been getting away with charging ridiculous overdraft fees for years, with most of the major banks dinging customers with a $35 penalty if their account is negative.
Kudos to Bank of America, who announced they would peel back on the penalty, and in the future, will only charge $10 instead of $35 starting in May. They also are dumping the fee that hits customers for non-sufficient funds, which hit when the bank rejects a transaction.
BofA is the second-largest bank in the U.S., and they said about 25% of their overdraft/NSF fee revenue each year comes from the NSF fees.
Banks make big money on these fees, and BofA said their moves would cut their overdraft-fee revenues by 97%.
Needless to say, consumer groups and politicians who have been trying to get banks to do this for years are feeling good. Here’s what Martin Eakes, the CEO of the Center for Responsible Lending, said about the move.
“I’ve been working to reduce or eliminate overdraft fees for 20 years, and to give them credit, they really did listen. This could potentially lead to hundreds of millions of dollars staying in customers’ accounts instead of going toward fees.”
Bank of America is also going to stop punishing customers in another way. They are dumping the $12 fee it charged customers when they automatically moved money from one account to another to avoid an overdraft.
In 2021, the trend of eliminating or reducing overdraft fees took hold. Ally Bank, PNC, Santander, and Capital One all completely eliminated the annoying overdraft fees they had been charging.