Bank of America reportedly is weighing a plan to introduce a checking account that would not allow customers to overdraw their balances at an automated teller machine or when making an automatic bill payment. The move would build on a decision the Charlotte, N.C.-based bank made several years earlier to restrict customers from overdrawing their account when making a purchase with a debit card.
If the plan comes to fruition, BofA would be the first major financial institution to block overdrafts on checking accounts. The Consumer Financial Protection Board has scrutinized overdraft practices at banks, calling the policies confusing for consumers and saying that frequent users of overdraft coverage could wind up paying $900 more in fees each year. Some consumer advocacy groups, meanwhile, argue that spenders would be better off if they did not have access to money not already in their accounts. "Consumers are well-served when there are full-functioning transaction accounts that simply don't have an overdraft as an option," says Tom Feltner of the Consumer Federation of America.