Bank of America Cutting Overdraft Fees to $10, Eliminating NSF Fees
As banks across the country examine their overdraft policies under criticism from consumer advocates, with several eliminating overdraft fees altogether, Bank of America recently announced that it is cutting its overdraft fees from $35 to $10 and eliminating non-sufficient funds (NSF) fees. The changes will slash the bank’s overdraft fee revenues by 97 percent from its 2009 level, the bank said in a press release.
“Since 2010, Bank of America has taken many steps to empower its consumer and small business clients to bank with greater confidence and reduce overdraft usage,” said Holly O’Neill, Bank of America’s president of retail banking, in a press release announcing the changes. “The company leads the industry in helping clients avoid overdrafts and, in doing so, has significantly reduced the vast majority of fees related to overdraft.”
“We remain committed to taking actions that will further bring down overdraft fees in the future and continue to empower clients to drive positive changes to behavior pertaining to overdraft,” O’Neill added.
Bank of America’s plan to remove non-sufficient fund fees will take effect in February, and the $10 overdraft fee change will be enacted in May. The bank also plans to do away with customers’ ability to overdraw their accounts with ATM transactions, and will swap transfer fees with a program that allows customers to link other accounts to help avoid overdrafts.
Several banks have developed programs to help customers avoid overdraft fees or temporarily cover them as criticism for the fees increase among consumer advocates. Both Capital One Financial and Ally Financial have permanently eliminated overdraft fees.
The industry has also made changes to overdraft supervision as the Biden administration continues to criticize the fees. For example, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra pledged to crack down on big banks that rely on the fees, like Bank of America, JPMorgan Chase, and Wells Fargo.
Bank of America said its planned changes are part of a years-long effort to help customers avoid overdrafts. It began sending low-balance alerts in 2011, launched an overdraft-free account in 2014, and started Balance Assist in 2020, a short-term loan program that allows consumers to borrow up to $500.