The Center for Responsible Lending (CRL) applauds Bank of America for taking another important step that prevents costly overdraft fees for consumers.
"Overdraft fees have a punishing impact on financially vulnerable Americans, often ousting them from the banking system altogether," said Gary Kalman, executive vice president of CRL. "CRL commends Bank of America for offering a more responsible approach to banking."
Over the last 15 years, overdraft programs have evolved from an occasional courtesy to a practice designed to extract fees from consumers. Revenue from overdraft fees doubled between 2004 and 2008 due largely to the expansion of overdraft fees to debit cards; without overdraft, these transactions are simply declined at no charge to the consumer. Even following a 2010 "opt-in" rule that applies to overdraft fees on certain transactions, these high, back-end, often surprise fees, cost consumers $16.7 billion in 2011.
Bank of America's new approach is designed to prevent bounced checks and overdraft fees completely, while still allowing access to the account via debit card, ATMs, mobile banking, and online bill payments.
"CRL is heartened to see one of the nation's largest banks continue to acknowledge the harmful effect of overdraft fees and offer a better structured and more predicable approach to accounts," said Kalman. "This is an important step toward safe and fair banking practices."
In 2010, Bank of America eliminated overdraft fees on debit card purchases, joining Citigroup, which never charged them. HSBC also does not charge overdraft fees on debit card purchases.
For more information, contact Catherine An in DC at 202-349-1878 or catherine.an@responsiblelending.org