Banks Reign in Overdraft Fees on Debit Cards

A couple of weeks ago we discussed how banks were drawing the ire of their customers and the attention of legislators for charging excessive overdraft fees to their debit card customers.

Well it seems as if they’re not quite as tone deaf as we thought they were. At least some of them anyway. Chase and Bank of America both recently announced that they would be adjusting their rules as far as how overdraft fees are handled.

Chase will no longer be automatically providing overdraft protection to their customers. The customer will now have to voluntarily opt-in to having overdraft protection on their account.

What this essentially means is that without overdraft protection if a person uses their debit card but does not have sufficient funds to cover their purchase it simply will not be approved by the merchant.

They were automatically enrolling people in the overdraft protection service that they provide because of the fact that the overdraft fees are so incredibly lucrative for them.

The banks were, and still are, making billions ($27 billion by some accounts) on overdraft fees by charging their customers approximately $35 every time they make a purchase without sufficient funds in their account to cover it.

Another modification that Chase has adopted is that they will not charge an overdraft fee if the customer is overdrawn in their account by $5 or less. Bank of America, for their part, has revamped their policy as well. They will only charge overdraft fees if the customer is overdrawn by $10 or more in any given day.

Bank of America further stated that it is working on a new policy that will improve the process by which customers can opt out of overdraft coverage.

You can bet there’ll be more banks to follow as the less than flattering spotlight further shines on how financial institutions profit from their customers.

Related Information:

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