Bank of America is planning to eliminate bounced check fees, among other fee reductions.
Non-sufficient funds (NSF) fees are almost universal among banks and credit unions. They’re the fee a bank charges when a customer overdraws their account by check. It’s less common these days, with the slow death of the paper check, but it still happens with automated payments, like bills. According to Bank of America, the banking industry collected over $30 billion in fees from their customers in 2020, and that was a slow year.
Bank of America, which is the largest consumer banking business in the U.S., is dropping NSF fees altogether, which they estimate will save their customers hundreds of millions of dollars. They will also reducing overdraft fees from $35 per transaction to $10.
Similar to NSF but separate, an overdraft is when someone makes a purchase on a debit card that exceeds the available cash in their account. The bank covers the difference, and tacks on the fee. Even moderate fees like the new $10 can quickly escalate, if someone is shopping and doesn’t realize they’ve gone over until they’ve made multiple small purchases.
“This is the final step in the journey we’ve been on,” said Holly O’Neill, president of retail banking at BofA, in an interview. “We have good financial solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed.”
Other fees that are being eliminated include a $12 fee for the bank moving your own money around between multiple accounts to prevent overdraft, and any ATM overdraft fees because BofA ATMs will no longer allow users to overdraw their accounts.
NSF and overdraft fees have been a reliable income for banks for decades, but they are functionally a fine for being poor, and more banks are moving towards abandoning them, a good sign.
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