Capital One is on to something that will really benefit its customers. On Wednesday, the bank announced that it would “completely eliminate all overdraft fees and non-sufficient fund fees” for customers.
This makes the bank the first of the biggest retail banks in the country to stop the practice. A move that will make consumers advocate that has previously criticized the approach, PEOPLE reported.
The penalties will end at the beginning of 2022. All customers enrolled in overdraft protection will be automatically enrolled in a free overdraft protection service. For those not enrolled in the service, transactions that would overdraw their account will also be declined without a fee.
Capital One says they are “excited to offer this service for free.”
“Long ago, we set our sights on reimagining banking,” Capital One founder and CEO Richard Fairbank said in a statement.
“Eliminating overdraft fees is another step in our effort to bring ingenuity, simplicity, and humanity to banking.”
The practice of charging customers overdraft fees is considered lucrative. In 2919, the banking industry profited over $15 billion in overdraft fees, according to the Consumer Financial Protection Bureau Banks.
A spokesperson for the bank told CNBC that eliminating overdraft fees will cost Capital One an estimated $150 million in lost revenue annually.
“Capital One’s complete elimination of overdraft and NSF fees is a landmark moment for American families,” associate director of the National Consumer Law Center Lauren Saunders started.
“This move by Capital One will have tremendous benefits for the most vulnerable consumers,” Saunders added. “It’s critical we keep working to make the banking system more inclusive and fair for all.”
On Wednesday, the Consumer Financial Protection Bureau announced that banks “continue to rely heavily” on overdraft and non-sufficient funds revenue.
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