Bank of America is pilot-testing a new option that aims to avoid overdraft fees by blocking customers from withdrawing more money than they have in their checking account.
Instead of imposing a $35 overdraft charge when spenders overstep their financial limit, SafeBalance accounts will deny the transaction at the ATM or at the point of sale. It will not even allow online bill payments to go through if there are insufficient funds.
The new option could benefit bank customers whose balances are frequently low and who tend to overdraw their accounts on a regular basis. According to the Consumer Financial Protection Bureau, overdrawing an account costs bank customers about $225 in fees annually. That is significantly more than the roughly $60 per year, or- $4.95 per month, that SafeBalance -- now in pilots in five states plus the District of Columbia -- will cost.