Bank of America is giving its bank customers a break.
The bank has announced plans to reduce overdraft fees to $ 10 from $ 35 starting in May and completely eliminate insufficient fund fees as early as February.
“These latest steps will further support our customers and enable them to create long-term financial well-being,” Holly O’Neill, president of retail banking at Bank of America, said in a statement.
“We remain committed to taking actions that will further reduce overdraft fees in the future and continue to empower clients to make positive changes in overdraft behavior,” she added.
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“Reducing overdraft fees from $ 35 to $ 10 paves the way for other banks,” said Greg McBride, chief financial analyst at Bankrate.com. “Don’t be surprised if this sets off a parade of similar announcements in the coming weeks. “
Ally Bank also announced last year that it was dropping the fees and Capital One said it will eliminate all overdraft fees for retail bank customers from 2022.
Overdraft fees are considered one of the most expensive and common fines on checking accounts because you can get hit multiple times in a single day if you spend more money than you have on your account. account.
The Bureau of Consumer Financial Protection found that 5% of checking account holders are overdrawn more than 20 times a year.
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Additionally, a majority of bank customers who pay overdraft fees are also considered “financially vulnerable” and disproportionately belong to minority groups, according to another FinHealth Spend report.
During the Covid pandemic, federal regulators encouraged banking institutions to waive these fees to provide relief to consumers facing severe financial hardship, and many banks did offer such difficult accommodations, albeit temporarily.
Still, the average penalty hit a record high of $ 33.47 in 2020. In total, Americans paid more than $ 12 billion in fees for bad checks and overdrafts last year, FinHealth found.
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