Bank of America Introduces Program to Help Customers Avoid Overdrafts
Bank of America Corp. recently introduced a new program, titled Balance Connect, which will automatically move customers’ money to avoid overdraft fees. Customers can link their checking account with up to five other Bank of America accounts and transfer funds for a $12 fee, which is less than current overdraft charges. For certain clients and types of checking accounts, this fee is waived.
“If you’re about to overdraw your account, we’ll automatically transfer available funds from your linked backup account,” says an FAQ page on the program. “If you’ve linked multiple backup accounts, we’ll automatically transfer available funds from those accounts in the order you established.”
“We want to give clients the solutions to be able to avoid these kinds of fees wherever, whenever possible,” said Steve Boland, president of retail at Bank of America, in a phone interview with Bloomberg. The bank has taken steps to help customers avoid overdrafts since 2014 with its SafeBalance Banking account that does not charge overdraft fees. The number of these accounts has risen by 40 percent in the past year.
With overdraft protection, consumers are typically charged $35 every time they spend more than they have in their checking account, which generates nearly $20 billion a year for U.S. banks. An article posted in Yahoo Finance noted that frequent users of overdraft protection make up more than half the profitability of mass-market checking accounts.
Bank of America generated $509 million in overdraft fees during the first half of 2021, an 8.6 percent decline from 2020. Additionally, the bank’s short-term loan program, titled Balance Assist, is close to surpassing 100,000 loans. The program, which launched last October, allows customers who have checking accounts for more than a year to borrow up to $500 for a $5 fee.
“Everybody has different financial needs,” said Erin McCullen, Bank of America’s head of consumer deposit products. “We want to provide those folks with the right solutions at the right time so they can manage their finances.”