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Bank of America Ends Some Overdraft Fees

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Last year, Smithee reported that Bank of America was the first major bank to allow customers to opt out of overdraft protection and the associated fees. Those customers who opted out of overdraft protection would have their card rejected when attempting to make a purchase without the funds available.

Thanks to these changes as well as the limitation of four overdraft fees charged per day rather than ten, the bank lost out on $160 million in income in the last three months of 2009. Nevertheless, the bank will continue to make changes to comply with federal regulations.

Bank of American announced additional changes coming this summer, and I expect other banks will follow suit. On June 19 for new customers and in early August for existing customers, Bank of America will cease all overdraft protection on debit card purchases. After the policy change, no customer will be able to spend more than they have available in their account while using their debit card. The transaction will be declined.

Bank of AmericaThe type of overdraft protection being eliminated is the type where the bank covers the funds in the short term and your checking account balance will head into negative territory. Customers will still be able to link their checking accounts to credit cards or savings accounts, so overdraft coverage in the form of a transfer from their own account will be available for a fee $10.

The bank-covered overdraft protection will continue to be available for checks and automated payments. Banks still see this as a convenience to the customers; no one wants their mortgage payment to bounce or be denied. At the ATM, if a customer attempts to withdraw more than the amount available, the machine will warn the user than a $35 fee will be charged if the withdrawal continues.

Bank of America is making it clear that it is looking to win points with customers with this move to eliminate certain overdraft fees. I have no concern about Bank of America’s ability — as well as the ability of any other big bank — to continue to find ways to charge unexpected and excessive fees. It’s a great reason to track your finances and keep your finances simple.

Photo: taberandrew

Published or updated March 9, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 3 comments… read them below or add one }

avatar Smithee ♦1,358 (Quarter)

I worked for Bank of America customer service in Seattle (after they acquired SeaFirst Bank), and by far we got the most calls about overdraft charges. Unfortunately, the system was set up at the time not to allow linking a savings account to help with overdrafts of any kind. They only allowed the credit card option.

Hopefully they’re fixing that nationwide, too.

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avatar Evan

ING does something cool where it lets you go into negative territory up to -$150 but when you do you get an email and they charge you I think a 7 or 8% interest but NO Fees.

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avatar SavingEverything

Glad to see one big bank is doing this. I remember a while back, banks used to always decline me if i charged over my balance, or, when I went to an ATM for $20 when all I had left was just under $8. It’s about time they go back to the basics. How will Bank of America gain or recoup these lost revenue fees? How many other banks will follow suit? Is this just marketing ploy for the Bank of America? I thought starting July 1, 2010 for new accounts opened then and after, or August 15, 2010 for existing accounts, that consumers must opt-in to allow bank’s standard overdraft services to apply for everyday debit card and ATM transactions. If consumer doesnt opt-in, and they do not have enough money to cover a debit card or ATM transaction, then it will get denied and no overdraft fees!?!

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