Bank of America slashes fees for account overdrafts
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The Justice Department announced Friday a cross-government campaign to investigate and prosecute redline, the practice of banks discriminating against racial minorities or certain neighborhoods. ( Oct. 22 ) AP NEW YORK ( AP ) — Bank of America is slashing the amount it charges customers when they spend more than they have in their accounts and plans to eliminate wholly its fees for bounce checks. It ’ s the latest move by the nation ’ sulfur biggest banks to roll back the overdraft fees they long charged customers, fees that often amount to hundreds of dollars a class for patronize overdraft users. The bank based in Charlotte, North Carolina, will cut the overdraft fees it charges customers to $ 10 from $ 35 starting in May. It will besides stop charge fees for non-sufficient funds — which are levied when it rejects a transaction — better known as bouncing a check. While checks are no longer wide used, NSF fees can come from automated payments like utility bills. Bank of America, the state ’ s second-largest trust, says roughly 25 % of its overdraft/NSF fee gross each year came from NSF fees. Bank of America minimum wage : Bank of America to boost minimum wage to $ 25 an hour for its employees by 2025
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raw, 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. “ This is the final examination step in the travel we ’ ve been on, ” said Holly O ’ Neill, president of the united states of retail bank at BofA, in an interview. “ We have good fiscal solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed. ” For years, it was common that one large bank would increase the tip it was charging for overdraft, which would cause early banks to respond in kind. It remains to be seen whether the decisiveness by BofA — a leader in the retail deposit industry — to cut overdraft fees will pressure early banks to take similar measures. The bank is besides eliminating two smaller fees as well. It will no longer allow customers to overdraft their accounts at the ATM and will eliminate a $ 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-run savings report into the customers ’ basal check. overdraft has its origins in banks providing a service for a tip to customers who may have not balanced their checkbook correctly and wanted a bank to honor a buy. But the widespread use of debit cards changed this courtesy into a everyday informant of tax income for banks. If a customer lacked funds in their bill, a $ 5 coffee could end up costing $ 35 because of overdraft fees. Overdraft fees : overdraft fees hit lower-income Americans hardest. Will other banks follow ally in ending them ? overdraft fees became lucrative for the diligence but at the same time made banks a target for consumer advocates and regulators. After the fiscal crisis, Democrats put the Consumer Financial Protection Bureau and other regulators in mission of reining in overdraft fee tax income.
For years, BofA has slowly cut back on its overdraft fee practices. It got rid of overdraft fees tied to debit poster purchases in 2010 and created a checking account in 2014 that did not allow customers to overdraft. The SafeBalance bill is now the bank ’ s most normally opened account. But BofA and the broader industry were not ready to get rid of overdraft fees altogether until recently. many banks froze the fees they charged customers during the first year of the pandemic and industry silent booked commemorate profits. so starting in 2021, some larger banks started announcing they were dropping overdraft fees entirely. Ally Bank, PNC, Santander and Capital One were among the bigger regional banks to effectively eliminate overdraft fees .