Consumer Law

Bank of America Eliminates Overdraft Fees for Debit Cards

By Randall Ryder

Consumers have complained for years about being charged $35 overdraft fees for a $2 purchase. At least one bank, Bank of America (BoA), has listened and will eliminate overdraft fees on debit card purchases.

Starting on June 19 for new customers, and in early August for existing customers, customers who attempt to use a debit card without sufficient funds will be declined. For example, if your account has $1.56, and you attempt to buy a $5 sandwich, your card will be declined, and you will not incur an overdraft fee.

BoA will lose tens of millions of dollars with this change in policy, as debit purchases account for approximately 60% of BoA’s overdrafts. Overdraft fees generate billions of dollars for banks.

The decision also puts pressure on other banks to make similar changes. A unpaid member of BoA’sadvisory council said ?If Bank of America can forgo the fee income and do the right thing by their customers, this should be seen as a direct challenge to the other big banks to match and do the same . . . .?

Bank of America to End Debit Overdraft Fees

(photo: Neil T)

Full post as published by Caveat Emptor on March 18, 2010 (boomark / email).