Bank of America cutting overdraft fees

Bank of America (BofA) will decrease the amount it charges customers for spending more than they have in their accounts and will eliminate charges for bounced checks, The Associated Press reported.

BofA, which is based in Charlotte, N.C., will cut overdraft fees from $35 to $10 beginning in May, according to the AP. It will also stop charging fees when customers’ transactions are rejected due to non-sufficient funds (NSF) in their accounts. These fees could be incurred when using checks or automated payments.

The bank said that about 25 percent of its overdraft fee revenue each year comes from NSF fees, according to the wire service. It estimated that the recent decision will cut its overdraft fee revenues by 97 percent from their amount in 2009, which was the year before it began taking steps toward decreasing overdraft fees.

“This is the final step in the journey we’ve been on,” said Holly O’Neill, president of retail banking at BofA, of the decision, according to the AP. “We have good financial solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed.”

BofA will also eliminate some additional small fees. Customers will no longer be able to overdraft their accounts at the ATM, according to the wire service, and will no longer have to pay the $12 fee BofA used to charge customers when it automatically moved money between accounts to avoid an overdraft, usually by moving money from a savings account into a primary checking account.

BofA has incrementally cut back on overdraft fee practices over the past decade. It cut overdraft fees for debit card purchases in 2010 and created the SafeBalance account, a checking account that does not allow customers to overdraft, in 2014, according to the AP. That type of account is now the most frequently opened at the bank, according to the wire service.

The announcement follows decisions by several large banks in 2021 to significantly roll back overdraft fees, according to the AP. Ally Bank, PNC, Santander and Capital One are among the larger banks that have effectively eliminated overdraft fees.

Overdraft fees often amount to hundreds of dollars per year for frequent overdraft customers, according to the wire service.