Bank of America is giving its customers a break.
The bank plans to eliminate non-sufficient funds fees as soon as February and reduce overdraft fees to $10 from $35 in May.
Bank of America will continue to support clients and empower them to create long-term financial well-being with the latest steps, according to Holly O'Neill, the president of retail banking.
She said that they are committed to taking actions that will bring down overdraft fees in the future.
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The chief financial analyst at Bankrate.com said that a reduction in the overdraft fee from $35 to $10 would be a trail blazer for other banks. Don't be surprised if this leads to a lot of similar announcements in the weeks ahead.
Ally Bank and Capital One both said last year that they would no longer charge overdraft fees for retail banking customers.
If you spend more money than you have in your account, you can be fined overdraft fees, which are one of the most expensive and common checking account fines.
5% of checking account holders have overdrawn their account more than 20 times a year.
A majority of banking customers who pay overdraft fees are considered financially vulnerable and disproportionately belong to minority groups according to a separate report.
During the Covid pandemic, federal regulators encouraged banking institutions to waive these fees to provide some relief to consumers experiencing severe financial strain, and many banks did offer such hardship accommodations, although only temporarily.
The average penalty hit a record high in 2020. Americans paid more than $12 billion in bounced checks and overdrafts last year.
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