You know how it is when your bank account is low, and inevitably something else gets taken out, and now you’re in the negatives. The bank adds insult to injury by charging you for what you don’t have. Now, Bank of America is planning to reduce the amount of overdraft fees and eliminate penalties for bounced checks.
While overdraft fees won’t completely go away, they are being significantly lowered. Starting in May, the Charlotte, North Carolina-based bank is cutting the fees from $35 down to $10.
It will also stop charging for non-sufficient funds, called bouncing a check. This occurs when a transaction is denied, and although using checks is not as common, it still happens. These penalties are applied when an automated payment is rejected.
The banking industry profited heavily from overdraft fees over the years. But BofA has been slowly working to reduce the financial impact on its customers. It’s estimated that rolling back overdraft fees will drop revenue from the practice by 97 percent from what the bank was raking in in 2009.
Just one year later, BofA eliminated overdraft fees linked to debit card purchases. In 2014, they created TheSafeBalance account, which is a checking account that does not allow customers to overdraw the account.
“This is the final step in the journey we’ve been on,” Holly O’Neill, president of retail banking at BofA, said. “We have good financial solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed.”
In addition, Bank of America is slashing two other smaller fees. The bank will no longer allow customers to overdraw their account at the ATM and is getting rid of the $12 fee associated with automatically moving money from one account to another to cover an overdraft.
Last year, regional banks Ally Bank, PNC, Capital One, and Santander all effectively ended overdraft penalties. It remains to be seen whether other big banks will follow BofA’s lead and cut their overdraft fees.