Bank Of America Cuts Overdraft Fees, Eliminates Insufficient Funds Fees

Bank of America said Tuesday it would eliminate insufficient funds fees and cut overdraft fees from $35 to $10, the latest move from a large bank away from the practice, amid years of pressure from critics who say the fees unfairly target vulnerable communities.

A Bank of America ATM is seen. Wall Street expects Bank of America to report a third quarter profit. In this photo, Elise Amendola.

The Associated Press.

Bank of America will end non-sufficient funds fees in February and reduce overdraft charges in May, the bank said in a press release.

Bank of America says the changes will result in a decrease in overdraft revenues.

The bank has reduced its overdraft fee practices by creating a checking account that does not allow customers to overdraw, and by cutting its overdraft fees on debit card purchases.

Critics have called for the abolition of overdraft fees for years, saying they disproportionately affect people of color and people living paycheck to paycheck. Elizabeth Warren is an advocate for eliminating the fees. She criticized Jamie Dimon for the bank collecting over $1 billion in overdraft fees in 2020. During the hearing, Warren Dimon said that you and your colleagues came in to talk about how they helped their customers during the Pandemic. It's a bunch of baloney.

There is a structure called the Tangent.

Capital One became the first large financial institution to completely end overdraft fees in December, joining some smaller banks that have moved away from the practice. Ally Bank said it would end the practice in June due to the impact on low-income Americans and people of color.

The number is big.

The value is $15.47 billion. According to a report from the Consumer Financial Protection Bureau, the U.S. banks made about $65 million from overdraft and non-sufficient funds fees in 2019. Bank of America, Wells Fargo and JP Morgan Chase made up 42% of the total.

Here is why overdraft fees matter.

Is there no more overdraft fees? Capital One becomes the first large bank to end fines.

The impact on low-income Americans and people of color will be eliminated by Ally Bank.