Bank of America and Wells Fargo said Tuesday they would eliminate, reduce or relax fees for customers who overdraw their accounts, joining other banks in backing off such charges under pressure from regulators.
Bank of America said it will stop charging $35 non-sufficient funds (NSF) fees in February and will cut overdraft fees to $10 from $35 starting in May. Wells Fargo will eliminate its NSF fees by the end of the first quarter, among other changes.
Banks charge NSF and overdraft fees (often referred to interchangeably) when there isn’t enough in a customer’s account to cover a purchase or scheduled payment. If the transaction is covered by an overdraft protection plan, it still goes through but the customer is charged an overdraft fee. Otherwise, the transaction is rejected and the customer must pay an NSF fee.
The country’s second- and third-largest commercial banks after JPMorgan Chase are curtailing these fees amid pressure from activists and federal regulators who point out that they fall heavily on customers already in financial distress. In recent months, Capital One and Ally Bank eliminated overdraft and/or NSF fees, and JPMorgan Chase gave customers more leeway to avoid them.
The Consumer Financial Protection Bureau called out JPMorgan Chase, Bank of America, and Wells Fargo last month for being the top collectors of overdraft fees. BofA said its new policies, along with previous changes, will reduce overdraft fee revenue by 97% compared with 2009 levels.
Bank of America will also stop letting customers overdraw at ATMs and eliminate the $12 transfer fees it charges when customers link other accounts to their checking account in order to automatically cover overdrafts.
Wells Fargo will also eliminate transfer fees for use with linked accounts by the end of the first quarter, and by the third quarter, add a 24-hour grace period and earlier access to direct deposits.
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