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BofA Put an End to Overdraft Fee

Contributed by mm | March 10, 2010 1:16 AM PST

6404-overdraft.jpgMore than one news outlets (USA Today, WSJ, AP) reported that Bank of America will formally end its practice to charge overdraft fees that go as much as $35.

Starting from June 19 for new customers and starting from August for existing customers, BofA will:

1) Disallow overdraft at point of sale
2) When customer's ATM withdrawal will result in negative balance, BofA will ask customer permission on the $35 charge before they will get the money.
3) Customer can still opt in for overdraft protection.

BofA made the move following Federal Reserve regulation that forbid banks from charging such fees unless with customer permission. It is widely believed that many other banks will follow the lead of BofA, which issues 15% of the nation's debit card, and adopt similar policies. (Citi already ended overdraft fee.)

Like many others, I always keep at least a few hundred bucks in my checking account, so I never had to pay a dime on overdraft protection charge in my life. Actually, although this new change makes no difference to me on the surface, it might bring unintended consequences. As reported by Eileen Aj Connelly at Associated Press:

What's more, 93 percent of overdraft fees are generated by just 14 percent of customers.


Because most of the fees were paid by what Robert Meara, a banking analyst with the consultant Celent, called "serial overdrafters," the rules may not save the average consumer much money. In fact, because banks will look to make up that lost revenue, it may actually cost most individuals more.

"What this may do really is produce the unintended consequence of creating the demise of free checking," said Meara. Banks jumped into free checking in the last decade because of competition, but at the same time started allowing overdrafts that generated huge sums. If they can't charge those fees, it's likely they won't offer the free products anymore either.

Or, he suggested, consumers might start seeing deals advertised where free checking kicks in after a certain number of transactions, or if a customer has several accounts linked together.

"I think banks will use this as an opportunity to be creative and differentiate themselves in ways that was really hard to do when everybody had a free checking account," Meara said. "There's a way this can be a win-win for everybody, but in the short term I think it's going to be challenging for banks to make up for that lost revenue."

Do you think the days of free checking offers will end soon?

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Порно онлайн Commented on April 9, 2010

Thank you for the post for himself opened a lot of new ... would write in detail what I think about it, but probably everything is clear



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