Bank of America Eliminates Overdraft Fees on Debit Purchases
Bank of America announced yesterday that it will stop its program that allowed consumers to overdraw their checking accounts for debit purchases, a program that often resulted in hefty fines for customers who may not have known that their bank account was a few dollars or cents short. That means that a cup of coffee won’t suddenly cost $35 more when your debit purchase exceeds the funds in your account. These point of sale overdrafts are particularly controversial because of the relative small size of the “loan” versus the high cost of the overdraft fee.
Overdraft fees were expected to cost Americans $38.5 million in 2009 alone.
The bank will continue to allow customers to overdraw at ATMs, but it will give warnings if their account doesn’t have as much cash as requested and will alert customers of the overdraft fee at that time instead of letting them find out when they get the bill later.
These changes will be effective June 19th for new customers and in August for existing customers. Citibank has a similar policy already in place.
For more information about this change, see the latest article in the New York Times.