In a new development reflecting the changing attitudes of the largest U.S. banks, Bank of America has significantly reduced the fee charged to customers for overdrafting their account and will eliminate charges for non-sufficient funds (NSF). Overdrafting most commonly occurs when debit card users spend beyond the cash available in their accounts. Beginning in May, overdraft fees will drop from $35 to $10. BofA reported that these adjustments will reduce its overdraft-fee profits by 97% from where they were in 2009—one year before measures were taken to reign in that revenue.
For NSF charges, BofA recognizes that this occurrence in modern times is more often related to automated payments like utility bills rather than bounced checks. The bank reported that around a quarter of its overdraft/NSF fee revenue came solely from NSF fees.
Holly O’Neill, President of Retail Banking at BofA, said, “This is the final step in the journey we've been on. We have good financial solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed.” Given BofA's industry-leading breadth and influence, the positive reaction from politicians and consumer protection groups will surely motivate competing banks to incorporate similar changes.
