Like the security of overdraft protection but don’t like the automatic $20 to $45 fees banks charge? You’re in luck — sort of.
In response to new federal rules that take effect July 1, a handful of banks are trimming the overdraft fees they automatically charge for debit purchases and ATM withdrawals. And to make up for the lost revenue, they have another plan: Convince customers to voluntarily opt in for overdraft coverage — that is, a line of credit that kicks in when account holders make purchases that exceed their available checking account balance.
Last week, U.S. Bancorp (USB) announced that customers who write checks, withdraw money from an ATM or use their debit cards on an account that is overdrawn, will see reduced fees. Currently, fees are based on the frequency of overages in a 12-month period. For the first incident, there’s a charge of $19. The second, third and fourth incidents come with a $35 penalty per overage. And when five or more overages occur within that year-long period, the fee kicks up to $37.50. Under the new fee structure, which is expected to take effect in August, any purchase of $20 or less on an account that’s overdrawn is assessed a reduced fee of $10, and anything over $20 gets a $33 fee. (Note that in a separate change made last fall, if an account is overdrawn by less than $10, there is no fee. Further, the number of overdraft transactions that get assessed a fee are capped at three per day as of March 31.)
Also at the end of March, Bank of America (BAC) announced a raft of changes to its debit-card fee policies. By June 19 for new customers and the middle of August for existing customers, Bank of America plans to do away with overdraft fees on debit-card purchases. That means the bank will refuse to cover one-time debit transactions of account holders who don’t have enough cash in their accounts — thereby eliminating the current $35 overdraft fee. The bank will, however, continue granting ATM withdrawals for customers who go over their balances for a fee of $35, says a Bank of America spokesman. In order to do that the customer will need to respond affirmatively to two prompts before being able to overdraft their accounts, says a the spokesman.
Separately, a number of other banks including JP Morgan Chase (JPM) have ramped up their marketing and overall employee outreach efforts to notify customers about the benefits of maintaining the status quo — that is, for many banks, automatically enrolling customers in overdraft services that charge hefty fees.
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