Bank of America ends overdraft fees.....

[bumplett]

I personally think it makes sense. If you don't have it, don't spend it.


Bank of America ends overdraft fees on debit cards : News-Record.com : Greensboro & the Triad's most trusted source for local news and analysis


NEW YORK (AP) — Bank of America customers will soon be unable to spend more than they have in the accounts linked to their debit cards. It's a step that may become a common move ahead of new regulations limiting overdraft fees.

Rules set by the Federal Reserve that will ban banks from charging such fees, without first getting permission from the customer, are set to take effect July 1.

But Bank of America is going a step further than the regulations require. It will simply no longer allow debit card purchases to go through if there isn't enough money in the account.

For ATM transactions, customers who try to withdraw more than their balance will have to agree to pay a $35 overdraft fee before they can get the money.

"The majority of our customers who overdraw their account do so with everyday debit purchases," said Susan Faulkner, senior vice president of consumer banking for Charlotte, N.C.-based Bank of America. "They're doing this unknowingly, because they aren't aware that they are about to overdraft."

Since the bank doesn't have the ability to notify the customer when they're at the register and give them the chance to agree to a fee, it will simply reject such transactions.

Consumers have demonstrated a willingness to pay overdrafts for covering the mortgage and the car payment, said Greg McBride, who follows the banking industry for Bankrate.com. "But not if it's things like covering a latte and a scone."

The bank's new policy will kick in on June 19 for new accounts, and in early August for existing accounts. It will replace the bank's current terms, which allow overdrafts to go through but only charge a fee if the deficit is greater than $10.

Bank of America is the first big bank to announce such a change, but it likely won't be the last. That's because while the new rules will save consumers from surprising dings on their accounts, they will also cut deeply into the more than $1.77 billion annual revenue overdraft fees generate for the banking industry.

Faulkner would not estimate how much such fees pulled in for Bank of America in the past.

The Federal Deposit Insurance Corp. estimates about 41 percent of that total is from point-of-sale debit transactions. About 8 percent was from ATM transactions. The rest were from bad checks and online bill payments, which are not addressed in the regulation.

What's more, 93 percent of overdraft fees are generated by just 14 percent of customers.

Because most of the fees were paid by what Robert Meara, a banking analyst with the consultant Celent, called "serial overdrafters," the rules may not save the average consumer much money. In fact, because banks will look to make up that lost revenue, it may actually cost most individuals more.

"What this may do really is produce the unintended consequence of creating the demise of free checking," said Meara. Banks jumped into free checking in the last decade because of competition, but at the same time started allowing overdrafts that generated huge sums. If they can't charge those fees, it's likely they won't offer the free products anymore either.

Or, he suggested, consumers might start seeing deals advertised where free checking kicks in after a certain number of transactions, or if a customer has several accounts linked together.

"I think banks will use this as an opportunity to be creative and differentiate themselves in ways that was really hard to do when everybody had a free checking account," Meara said. "There's a way this can be a win-win for everybody, but in the short term I think it's going to be challenging for banks to make up for that lost revenue."

[Russ]

I personally think it makes sense. If you don't have it, don't spend it.


."

Except now it's going to be :if you don't have it, you CAN'T spend it"

[bumplett]

Except now it's going to be :if you don't have it, you CAN'T spend it"

yep, I guess people will have to *gasp* learn how to balance a check book

[Inkstain82]

That's a large chunk of their revenue. I wonder how they intend on getting it back.

[Greebo]

yep, I guess people will have to *gasp* learn how to balance a check book

You...
You...
BLASPHEMER!!!

[bumplett]

shhhh..... I don't want anyone to hear me say the word


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:giggle:

[Russ]

The rest of the story...

The changes for new customers will come about sometime in June. For existing customers, the changes won't go into effect until August.

It will still be possible to have an overdraft, if you have an automatic withdrawal set up on your account. If you've scheduled your car insurance to be paid on the 18th of the month, and you haven't budgeted properly so the money isn't there, the payment will still likely go through, and you'll incur that dreaded overdraft fee. But at least if it's gone through and you aren't aware you're in the negative, you won't be able to use your debit card and spend your way into overdraft oblivion. (Not at Bank of America, anyway. It's easy to forget that this is just one bank making these changes -- not all banks.)

Starting this summer, if you go to your ATM and try to take out $50, and you only have $30 in your account, you'll see on the screen that you only have $30, and that if you take out $50, you'll incur a $35 fee on top of that. You have the option to then cancel the transaction. If you're in desperate need of $50 and don't mind paying the fee, then, by all means, keep doing your thing. (That they ever allowed people to take too much money out of their ATM in the first place seems incredibly wrong to me, almost as if you're allowing your customer to use a faulty product, although I suppose there's the argument that the customer could have checked their balance before taking out the $50. Oh well, water under the bridge, or soon it will be.)

If you go to a non-Bank of America ATM and try to take out $50 when you only have $30, you won't be warned and you'll still get charged an overdraft fee.

If you write a check and the funds aren't available, you'll still get charged a non-sufficient funds fee.

If you do want your debits to go through, Bank of America will let you link your checking account to a savings account or credit card. Some customers will still incur overdraft charges, but they'll be a much more manageable $10. (There's no fee if you're an Advantage checking customer.)

http://www.walletpop.com/blog/2010/0...ft-policies%2F

[bumplett]

ahhh, thanks Russ.

[weedaisy]

One day my hubby called BOA regarding overdraft fees because of something unexpected that happened (long story) and asked them why they would allow us to buy on our debit card if there wasn't any money in the account. BOA told us that their systems didn't allow for that. My hubby thought that the statement was BS - but what are you going to do? Hubs was all like - I knew they could do this - and puhleeze - they could apply this policy to old accounts at the same time if they wanted to.

Anyhow, to say something good about BOA, BOA has on many occasions credited me back my overdrafts - or at least a part of it. You just have to call and gripe.

[bumplett]

I would never call and "gripe" if the fault was my own.

I have, however, called and "asked" if they could help me out when I fully admit that something was MY fault.

I've always had good experiences with BOA.

[savvy_sniper]

People will still be able to bounce checks though! They will write checks, go to the ATM, get cash, and when the checks come through they will bounce.