Overdraft Fees By Banks Now Need Customer Consent
By: John Lester
Published: Mar 10, 2021
Bank of America introduces a new policy for overdraft fees on checking accounts.
Overdraft fees are about to get more expensive for Bank of America customers. Consumers will no longer be allowed to overdraw their checking accounts with one-time debit card transactions. The new policy and changes to fees take effect on July 1, 2010.
"What our customers told us is that, if I don't have the money, I don't want to overdraft," Susan Faulkner, head of Bank of America's deposits and card products business, said in a statement. "We don't think our customers would come in and opt in," she added, regarding debit card overdrafts and fees.
As of July 1, the bank will no longer charge $35 for an overdraft fee when customers overdraw their checking accounts in a debit-card transaction. Instead, customers can choose to have their debit card declined for insufficient funds or link the card to another account to pay for the transaction. The bank already cap's overdrafts at four a day and no longer charges a fee if an account is overdrawn by less than $10 a day.
However, it's not just this bank, but others will probably follow. The Federal Reserve has issued a rule that requires financial institutions to get consent from their customers before charging them fees for debit card and ATM overdrafts. Citigroup doesn't also allow customers to overdraw at the point of sale or at the ATM.
What The New Changes Do
- Overdraft charges for routine debit-card purchases will be eliminated
- Customers can link a savings or credit-card account to their debit card to prevent overdrafts
- Debit cards will be declined at the point of sale for customers who don't have a link to savings or credit card
- Customers using ATMs will be allowed to overdraw their accounts for the regular overdraft fee
- Account holders also will be able to receive an electronic alert whenever a checking account is overdrawn
- Customers will be notified of the new policies over the next few months.
The new Federal Reserve rules will also save consumers more than $1.77 billion in annual overdraft charges that are generated by the banking industry. In fact, 93 percent of the overdraft fees are generated by just 14 percent of customers. The fees are big business for the banks.
Bank of America Trashes House After Repossession
A Pennsylvania woman is suing Bank of America. She claims that it wrongfully repossessed her home. The woman said that a contractor trashed her house and took her parrot.
Angela Iannelli, 46, claims her mortgage payments were on time before the contractor damaged her house and took her pet parrot. She arrived one afternoon and found a padlock on her door. Iannelli was livid and horrified at what she saw.
The suit seeks unspecified damages. Iannelli's attorney says she suffered irreparable emotional damage and is afraid to set foot in the house. However, she eventually regained possession of the bird, named Luke, after repeated phone calls to the bank.