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Last updated June 16, 2021
What Is an Overdraft Fee?
Bank of America issues you an overdraft fee (overdraft item fee) when you don’t have enough money in your account to complete a transaction but the bank pays for the transaction anyway. This will cause your account to have a negative balance, and you will incur a fee on top of it.
Transactions that can trigger an overdraft item fee include:
- Checks or other transactions made using your checking account number
- Recurring debit card transactions (e.g. gym memberships, streaming service subscriptions)
- ACH transactions
- Online or automatic bill payments (e.g. auto-pay utility bills, credit card payments)
Bank of America can cover other types of overdraft transactions, but you first have to opt into overdraft protection. In addition to the transactions covered by the overdraft item fee, other types of transactions covered by overdraft protection include:
- Everyday, non-recurring debit card transactions (gas, groceries, etc.)
- ATM withdrawals
Bank of America is not obligated to cover any transactions that overdraft your account, regardless of transaction type or overdraft protection status. The decision is ultimately at the bank’s discretion.
How Much Does an Overdraft Fee Cost at Bank of America?
Bank of America charges $35.00 per overdraft fee.
The fee only applies to transactions that cause you to overdraft your account by more than $1.00. For example, if you make a purchase and your account only falls to -$0.50, you will not incur an overdraft fee.
If you overdraft your account, a number of scenarios could occur:
- Overdraft item fee
- Overdraft protection transfer fee
- NSF/Returned item fee
Overdraft item fee
Overdraft item fees most often occur when you are not opted into overdraft protection and the bank allows you to overdraft your account on checks; recurring debit card transactions; ACH transactions; or online or automatic bill payments.
Overdraft protection transfer fee
Overdraft protection transfer fees most often occur when you are opted into overdraft protection and the bank allows you to overdraw your account on checks; recurring debit card transactions; ACH transactions; online or automatic bill payments; everyday, non-recurring debit transactions; or ATM withdrawals. Rather than a $35 overdraft fee, Bank of America will charge a $12 overdraft protection transfer fee if you are opted into the program. To enable overdraft protection, you must link a qualified account so that the bank can transfer funds from one account to another in the event of an overdraft. Qualified accounts include:
- Savings or secondary checking account
- Line of credit
- Credit card
A non-sufficient funds fee—or returned item fee—occurs when you make a purchase but there are not enough funds in your account to cover the transaction. Instead of covering for you, the bank will decline the transaction, or return the item unpaid. Bank of America charges $35.00 for each transaction that causes you to overdraft your account by more than $1.00. The bank will not charge you an NSF fee for ATM or debit card transactions, but can charge you a fee for:
- Checks or other transactions made using your checking account number
- ACH transactions
- Online or automatic bill payments (e.g. auto-pay utility bills, credit card payments)
Bank of America limits the number of overdraft fees—including both overdraft item fees and NSF fees—to 4 on a single day.
Some accounts, such as the Bank of America Advantage SafeBalance Banking or Advantage Savings accounts, are not eligible to receive overdraft or NSF fees. These accounts are automatically set to Decline All Overdraft, so if you attempt to make a purchase without sufficient funds in your account, the transaction will simply be denied.
If you opt into overdraft protection, you’ll have peace of mind knowing that most of your transactions are covered; however, there are many things to consider before opting in.
Overdraft protection is not mandatory. In fact, your bank is required to ask whether or not you want to opt in. When opening an account in person, this usually means that the representative will run through a long list of questions so they can get to know you better as a customer and customize your account to accommodate your needs. The overdraft protection question is usually lumped into this list of questions, so it can be easy to opt in without thinking about whether it actually makes sense for you and your financial situation. Do your research before opting in.
Opted-in accounts typically pay more on bank fees than accounts that aren’t opted in, and the bank could still charge you an NSF fee even if you are opted into overdraft protection. This might happen if you opted into overdraft protection but don’t have enough funds in your linked account to cover the transaction.
Remember: You can opt into or out of overdraft protection at any time.
Learn more about what you should know before opting into overdraft protection.
How to Avoid an Overdraft Fee at Bank of America
Overdraft fees are one of the most common charges detected on Cushion customers’ accounts, but there are small actions that you can take to avoid them:
- Keep an eye on your account balance and charges.
- Sign up for low-balance notifications.
- Carefully consider whether you should opt into overdraft protection.
How to Get an Overdraft Fee Refund
Sometimes, overdraft fees are inevitable. But we’ve got great news for you! If you get hit with one, that’s not the end of it. You can try to get Bank of America overdraft fees refunded on your own, or sign up for Cushion’s ⚛️ Fee Genius and optional 💭 Fee Negotiation add-on to try to get some of that cash back.
If you choose to go the road alone, here’s how you can increase your chances of success.
Prepare your information
Name, address, bank account number, the fees that you’d like to negotiate, and possibly your social security number.
“Hello. My name is [your name], and I recently received an overdraft fee while using my card. I’m contacting you to see if you would be willing to refund this fee.”
Have your points of leverage ready
Have you been financially affected by COVID-19? Are you a loyal customer who has banked with the institution for an extended period of time? Do you have multiple accounts with the bank? Do you make regular deposits? Is this overdraft a rare occurrence?
Be patient, persistent, and prepared not to get a refund every time
A little kindness goes a long way. Remember: The representative that you’re speaking with on the phone likely didn’t write the rules on refunds. But also, don’t hesitate to press the issue if you initially hear “no”—that’s what your points of leverage are for. Sometimes, success depends on the representative that you speak with, so try calling back a few days later to speak with someone new. Finally, you have to be willing to lose some negotiations. Try not to get discouraged, but do try to take the necessary steps to avoid an overdraft fee in the future.
Please note: If you are opted into Cushion’s 💭 Fee Negotiation add-on and contact your bank to negotiate fees while we have an open negotiation, Cushion will still take a commission on any successful negotiations. We cannot track external communication between you and your financial institution, so our system will automatically take credit for any refunds. If you have any questions about which fees are included in your active negotiation, please reference your Cushion dashboard.Learn more about how to get an overdraft fee refund.
Find Bank of America’s full fee schedule here.
Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.
*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.
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How do I activate my overdraft Bank of America?
Please call customer service at 800.432. 1000 to enroll. Note that the bank is under no obligation to pay an overdraft even if you enrolled in the service. Please find more details here: https://www.bankofamerica.com/deposits/manage/faq-overdraft-services.go
Is overdraft protection available at Bank of America?
Bank of America offers Balance Connect® overdraft services that provide overdraft protection by linking your checking account to your Bank of America savings account or credit card
Will Bank of America let you overdraft at ATM?
Feb 2022 ? Will eliminate non-sufficient funds fees. Feb 2022 ? Will remove ability for clients to overdraw their accounts at the ATM. May 2022 ? Will reduce overdraft fees from $35 to $10
Can I purposely overdraft my Bank of America account?
Yes, you can overdraft your account as long as you opt-in to the bank’s overdraft services. Please call customer service at 800.432. 1000 to enroll
How much emergency cash can I withdraw from Bank of America?
The maximum ATM cash withdrawal amount is $1,000 or a maximum of 60 bills that can only be dispensed at one time. There may also be different limits based on account type and availability of funds. The maximum ATM cash limit when setting up a withdrawal in advance in the Mobile Banking app is $800.
How do I get emergency cash from Bank of America?
Call Bank of America customer service at (800) 432-1000 and request a PIN, if you don’t already have one. Insert the credit card into an ATM and enter the PIN. Select the cash advance option on the ATM screen. Enter the amount you’d like to withdraw.
Can you overdraft a debit card with no money?
If you choose to opt in to debit card and ATM overdraft, you are usually allowed to make ATM withdrawals and debit card purchases even if you do not have enough funds at the time of the transaction. However, you will generally incur fees on transactions that settle against a negative balance later.
Does Bank of America offer emergency cash?
Bank of America has created a new way to help financially-strapped customers borrow up to $500 for unforeseen emergency needs.
What apps let you borrow money immediately?
Cash advance apps like Earnin, Dave and Brigit let you borrow a small amount from your next paycheck before you receive it. This quick fix may be helpful if you need cash in an emergency, but look for cheaper options before you borrow from an app.
Will Cash App let you overdraft?
Does Cash App charge interest for Overdraft? No, Cash App does not charge an overdraft fee. You, however, have to pay the amount in time to prevent your account from being terminated.
Balance Connect ® for overdraft protection – Bank of America
Overdraft Service FAQs: Balance Connect™, Limits, Fees & SettingsOverdrafts and overdraft protection FAQsSelect Your StatePlease tell us where you bank so we can give you accurate rate and fee information for your location. | Balance Connect® for overdraft protection Show all answers What is Balance Connect® for overdraft protection? Balance Connect® for overdraft protection is an optional service which allows you to link your eligible checking account to up to 5 other Bank of America accounts and automatically transfers available funds from your linked backup account(s) to cover transactions that exceed the available balance in your checking account. This can help you avoid declined transactions, returned checks and overdrafts.Show me how to enroll in Balance Connect How does Balance Connect® for overdraft protection work? If you’re about to overdraw your account, we’ll automatically transfer available funds from your linked backup account. If you’ve linked multiple backup accounts, we’ll automatically transfer available funds from those accounts in the order you established. Only one transfer will be made from each linked backup account to your checking account, even when multiple transactions are covered. An overdraft protection transfer won’t be made unless it can cover at least one transaction. What does it cost to have Balance Connect® for overdraft protection? There is no cost to set up Balance Connect®. There are no transfer fees when you use Balance Connect®. It’s important to note that your savings account may be charged a Withdrawal Limit Fee if you take money out of the account via withdrawal or transfers, including Balance Connect® transfers, more than six times in a statement cycle and that and transfers from a linked credit card or HELOC may result in interest charges.Please see the Deposit Agreement and Disclosures for more information about eligibility and how Balance Connect® transfers work.Keep in mind that overdraft protection transfers from a credit card will accrue interest at the Bank Cash Advance APR. In addition, overdraft protection transfers from a linked savings account count toward the six transactions you’re allowed each month and may lead to a Withdrawal Limit Fee. If I have overdraft protection can I still get charged overdraft fees? Yes, if there aren’t enough available funds in your checking account or linked backup account to cover an item, we’ll either pay it for you, overdrawing your account, we’ll decline it, or we’ll return it unpaid. If we pay an item for you and overdraw your account, you may be charged an overdraft fee. We won’t charge a fee when we decline or return an item unpaid due to insufficient funds. However, you may be charged a fee by the payee.Please see your Personal Schedule of Fees for more details. Overdraft Show all answers What is an overdraft? An overdraft happens when you don’t have enough money available to cover a purchase or a payment. Another way of saying this is an overdraft happens when a transaction exceeds your available balance. When this happens, we’ll either pay it for you, overdrawing your account, or we’ll decline it or return it unpaid. We make this decision at our discretion based on several factors such as the transaction amount and your account history.Please refer to the Deposit Agreement and Disclosures for more details. What does available balance mean? This is the amount of money in your account that is available to spend, withdraw or cover transactions. Your available balance is updated throughout the day based on your account’s activity. Your available balance incorporates any holds on your account, such as holds for debit card transactions we’ve authorized, and deposit holds.Keep in mind that there are a few things that are not included in your available balance such as checks you’ve written that we haven’t received yet and upcoming automatic payments. You’ll also want to account for transactions where the final amount may differ from the amount that was originally authorized, such as when a tip is added to a restaurant charge.Please refer to the Deposit Agreement and Disclosures for more details. You may also want to review our Deposit Holds FAQs. What happens if I don’t have enough money for my transaction? It depends on the type…
Bank of America Announces Sweeping Changes to Overdraft …
Bank of America Announces Sweeping Changes to Overdraft Services in 2022, Including Eliminating Non-Sufficient Funds Fees and Reducing Overdraft Fees Bank of America today announced significant changes to its overdraft services, including plans to eliminate non-sufficient funds (NSF) fees beginning in February, and to reduce overdraft fees from $35 to $10 beginning in May. The company will also eliminate the transfer fee associated with its Balance Connect™ for overdraft protection service in May. These and earlier changes over the last decade, together with industry-leading solutions that can help consumer clients avoid overdraft fees – such as the no overdraft fee SafeBalance® account and Balance Assist™ – will lead to overdraft fee revenues being reduced by 97% from 2009 levels. “Over the last decade, we have made significant changes to our overdraft services and solutions, reducing clients’ reliance on overdraft, and providing resources to help clients manage their deposit accounts and overall finances responsibly,” said Holly O’Neill, President of Retail Banking, Bank of America. “Throughout the process we have engaged our National Community Advisory Council (NCAC) for their guidance and feedback on our changes. These latest steps will further support our clients and empower them to create long-term financial wellness.” Since 2010, Bank of America has taken many steps to empower its consumer and small business clients to bank with greater confidence and reduce overdraft usage. The company leads the industry in helping clients avoid overdrafts and, in doing so, has significantly reduced the vast majority of fees related to overdraft. Key milestones along this journey have included: 2010 – Eliminated overdraft fees for consumer clients when using debit cards at the point of sale 2011 – Introduced courtesy low balance alerts 2014 – Launched the SafeBalance “no overdraft fee” account 2017 – Eliminated the extended overdrawn balance charge 2020 – Created Balance Assist, a low-cost solution to manage short-term liquidity needs 2021 – Launched Balance Connect for overdraft protection, letting clients link to up to five accounts to avoid overdrafts Feb 2022 – Will eliminate non-sufficient funds fees Feb 2022 – Will remove ability for clients to overdraw their accounts at the ATM May 2022 – Will reduce overdraft fees from $35 to $10 May 2022 – Will eliminate Balance Connect for overdraft protection transfer fee (formerly $12) “We remain committed to taking actions that will further bring down overdraft fees in the future and continue to empower clients to drive positive changes to behavior pertaining to overdraft,” added O’Neill. In addition to the changes to overdraft related fees, Bank of America’s suite of Essential Solutions offers a powerful combination of transparent, low and no cost, easy-to-use offerings that help clients budget, save, spend and borrow carefully and confidently. The full array of solutions includes: SafeBalance® – With SafeBalance, there are no overdraft fees, and the monthly maintenance fee is waived for eligible students under the age of 25 as well as for clients enrolled in our Preferred Rewards program. Balance Assist – Balance Assist provides an affordable way for clients to manage their short-term liquidity needs, borrowing only the amount they need, up to $500 (in increments of $100) for a $5 flat fee regardless of the amount borrowed. Repayments are made in three equal monthly installments over a 90-day period. To learn more, review these additional product details and eligibility criteria. Borrowers must have been a Bank of America checking account client for at least one year. Balance Connect – Balance Connect allows our clients overdraft protection through the ability to link up to five accounts to their checking, while increasing simplicity and accessibility through digital sign-up and management. BankAmericard® Secured Card – This credit card can help clients establish, strengthen or rebuild credit, and they can apply for an account with a security deposit starting as low as $300. With responsible credit behavior, over time,…
Why isn't BoA letting me overdraft my account? – WalletHub
Why isn’t BoA letting me overdraft my account? This question is about the Bank of America Core Checking WalletHub, Financial Company @WalletHub • 07/08/16 This answer was first published on 07/08/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company. To overdraft you will need to enroll in the bank’s overdraft services. Please call customer service at 800.432.1000 to enroll. Note that the bank is under no obligation to pay an overdraft even if you enrolled in the service. Please find more details here: https://www.bankofamerica.com/deposits/manage/faq-overdraft-services.go. Answer Question WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor’s answer is not indicative of future advisor performance. WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by a WalletHub user. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered. Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation “Sponsored”, where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products. Did we answer your question? Sorry! How can we improve this answer?
Bank of America Overdraft Fee, Limits, and Protection
Bank of America Overdraft Fee, Limits, and Protection Editor’s Note: Overdraft Apps provides detailed product reviews and recommendations based upon extensive research and our own hands-on testing. We may earn a referral fee when you sign up for or purchase products mentioned in this article. Bank of America FeesCostMaximum Overdrafts Per DayMaximum Daily CostOverdraft Fee$102$20Insufficient Funds Fee$00$0Linked Account Transfer Fee$00$0 Note that beginning in May 2022, Bank of America removed its linked account transfer fees and NSF fees and lowered the overdraft fee from $35 to $10. Have you ever been one day from payday when all your bills are due? This can lead to unpaid bills, credit problems, and other major financial issues. With modern banking, we’re protected from unforeseen circumstances that affect our ability to pay bills. This is called overdraft protection. Essentially, if you are automatically charged for a bill, but don’t have the money in your bank account, the bank will loan you the money for a fee. However, you must be careful with overdraft fees. One overdraft fee can offset your entire budget and, after just a few days, can accrue into hundreds of dollars. That’s why it’s imperative that you know your bank’s overdraft limits, policies and fees, how to avoid them and find alternatives to access the cash you need. What We’ll Cover: What is Bank of America’s overdraft policy?How much are Bank of America’s overdraft fees?How much will Bank of America let me overdraft at an ATM?Does Bank of America charge NSF fees?Can you get a Bank of America overdraft fee waived?How to avoid overdraft fees with Bank of AmericaFinal Thoughts and What To Do Next… What Is Bank of America’s Overdraft Policy? You’ll need to opt-in to Bank of America’s overdraft protection in order to access cash via an ATM or debit card transaction, or for a check or bill payment to be made if they would make your account negative by $1 or more. If you do not participate in overdraft protection, your transaction will be declined. Bank of America recently reduced its overdraft fees from $35 to $10 and limits overdraft fees to two per day, so you may incur up to $20 in overdraft fees per day. Bank of America allows overdrafts on the following transactions, four times a day, at their discretion: ChecksScheduled PaymentsEmergency Bank of America ATM Withdrawal Bank of America allows two overdraft options for your checking account: Standard – This allows Bank of America to paychecks and scheduled payments and charge you an overdraft fee.Decline All – This automatically declines anything that attempts to charge your account more than there is in it. Note that most checking accounts carry a monthly fee – the most popular account costs $12 per month, though it can be waived with a qualifying direct deposit or average balance above $1,500. Some Bank of America accounts, such as SafeBalance, have lower monthly fees but do not permit overdrafts. Bank of America has also eliminated its extended overdraft fee. However, if your overdrawn account is not promptly returned to a positive balance, your overdraft privileges and account access may be suspended. You may also subject to collection costs and account closure if your balance remains negative for several months. How Much Are Bank of America’s Overdraft Fees?…
Bank of America is cutting overdraft fees – CNBC
Bank of America is cutting overdraft feesBank of America is giving its banking customers a break.The bank announced plans to reduce overdraft fees to $10 from $35 beginning in May and eliminate non-sufficient funds fees altogether as soon as February. “These latest steps will further support our clients and empower them to create long-term financial wellness,” Holly O’Neill, Bank of America’s president of retail banking said in a statement.”We remain committed to taking actions that will further bring down overdraft fees in the future and continue to empower clients to drive positive changes to behavior pertaining to overdraft,” she added.More from Personal Finance:Amid rising prices, American families fall deeper in debt10 things that will be more expensive in 2022Your best money moves before interest rates riseBank of America is one of the country’s largest banks with 66 million consumer and small business customers and approximately 17,000 ATMs nationwide, according to the company.”Reducing the overdraft fee from $35 to $10 blazes a trail for other banks to follow,” said Greg McBride, the chief financial analyst at Bankrate.com. “Don’t be surprised if this unleashes a parade of similar announcements in the weeks ahead.”Last year, Ally Bank also announced it was ditching fees and Capital One said it would eliminate all overdraft fees for retail banking customers starting in 2022.Overdraft fees are considered one of the most expensive and common checking account fines, since you can get dinged several times in a single day if you spend more money than you have in your account.The Consumer Financial Protection Bureau found that 5% of checking account holders overdraft more than 20 times per year.Further, a majority of banking customers who pay overdraft fees are also considered “financially vulnerable” and disproportionately belong to minority groups, according to a separate FinHealth Spend 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. Still, the average penalty hit a record high of $33.47 in 2020. Altogether, Americans shelled out more than $12 billion in fees for bounced checks and overdrafts last year, FinHealth found.Subscribe to CNBC on YouTube.
Bank of America Overdraft Fee Guide – Cushion
Bank of America Overdraft Fee Guide Want to boost your credit score? Join the waitlist for a new Cushion offering coming soon! Last updated June 16, 2021 What Is an Overdraft Fee? Bank of America issues you an overdraft fee (overdraft item fee) when you don’t have enough money in your account to complete a transaction but the bank pays for the transaction anyway. This will cause your account to have a negative balance, and you will incur a fee on top of it.Transactions that can trigger an overdraft item fee include:Checks or other transactions made using your checking account numberRecurring debit card transactions (e.g. gym memberships, streaming service subscriptions)ACH transactionsOnline or automatic bill payments (e.g. auto-pay utility bills, credit card payments)Bank of America can cover other types of overdraft transactions, but you first have to opt into overdraft protection. In addition to the transactions covered by the overdraft item fee, other types of transactions covered by overdraft protection include:Everyday, non-recurring debit card transactions (gas, groceries, etc.)ATM withdrawalsBank of America is not obligated to cover any transactions that overdraft your account, regardless of transaction type or overdraft protection status. The decision is ultimately at the bank’s discretion. How Much Does an Overdraft Fee Cost at Bank of America? Bank of America charges $35.00 per overdraft fee.The fee only applies to transactions that cause you to overdraft your account by more than $1.00. For example, if you make a purchase and your account only falls to -$0.50, you will not incur an overdraft fee. Related Fees If you overdraft your account, a number of scenarios could occur:Overdraft item feeOverdraft protection transfer feeNSF/Returned item feeOverdraft item feeOverdraft item fees most often occur when you are not opted into overdraft protection and the bank allows you to overdraft your account on checks; recurring debit card transactions; ACH transactions; or online or automatic bill payments. Overdraft protection transfer feeOverdraft protection transfer fees most often occur when you are opted into overdraft protection and the bank allows you to overdraw your account on checks; recurring debit card transactions; ACH transactions; online or automatic bill payments; everyday, non-recurring debit transactions; or ATM withdrawals. Rather than a $35 overdraft fee, Bank of America will charge a $12 overdraft protection transfer fee if you are opted into the program. To enable overdraft protection, you must link a qualified account so that the bank can transfer funds from one account to another in the event of an overdraft. Qualified accounts include: Savings or secondary checking accountLine of creditCredit cardNSF feeA non-sufficient funds fee—or returned item fee—occurs when you make a purchase but there are not enough funds in your account to cover the transaction. Instead of covering for you, the bank will decline the transaction, or return the item unpaid. Bank of America charges $35.00 for each transaction that causes you to overdraft your account by more than $1.00. The bank will not charge you an NSF fee for ATM or debit card transactions, but can charge you a fee for:Checks or other transactions made using your checking account numberACH transactionsOnline or automatic bill payments (e.g. auto-pay utility bills, credit card payments) Special Considerations Bank of America limits the number of overdraft fees—including both overdraft item fees and NSF fees—to 4 on a single day.Some accounts, such as the Bank of America Advantage SafeBalance Banking or Advantage Savings…
Bank of America debuts overdraft alternative | Banking Dive
Bank of America debuts overdraft alternative Correction: An earlier version of this story misstated the percentage of Bank of America’s operating revenue that derives from overdraft fees. That percentage applies to deposit service charges and fees. Bank of America has unveiled a new service, called Balance Connect, that allows customers to avoid overdraft fees. This move signifies a larger trend within the banking industry of reducing these fees, as recent upticks in regulatory scrutiny and burgeoning competitive pressures have led some financial institutions to lessen their reliance on these fees to pad their bottom lines. Ordinarily, when a transaction is processed that exceeds a customer’s available funds, Bank of America charges a $35 overdraft fee — a price point shared by many of the country’s large banks, according to NerdWallet. Now, the bank is offering its clients a way to cut that cost. Balance Connect lets customers link their checking accounts to a maximum of five other Bank of America accounts. If a Balance Connect customer attempts to overdraw their checking account, the service will automatically shepherd funds across accounts for a $12-per-transaction fee. Recently, several other financial institutions have also begun to shift away from overdraft fees, as Democratic lawmakers set the their sights on refashioning the practice. A Morning Consult survey published in June found that 52% of U.S. adults believe overdraft fees are “an unfair penalty that disproportionately affects underprivileged customers.” Research by Oliver Wyman shows that “frequent overdrafters,” people who overdraw their account at least once a month and comprise only 10% of mass market consumers, generate more than half of all overdraft fee income. The firm estimates that “frequent overdrafters ‘pay for’ the 60 percent of mass market account holders who do not generate enough in interest income or fees to cover their fully loaded cost.” Although some of the country’s largest banks now offer services to help defray the cost of overdraft fees, in the past year banks across the country saw a 40% upsurge in overdraft fees. A recent report by S&P Global indicates that between July 2020 and June 2021, Bank of America collected a higher volume of deposit service charges than any of the other largest four banks in the country. In that time span, the Charlotte, North Carolina-based bank garnered $2.37 billion in operating revenue from deposit service charges and fees, accounting for 3.7% of the bank’s operating revenue. By comparison, according to S&P Global, that percentage, for Wells Fargo, is 3.1%; for JPMorgan Chase, 2.1%; and for Citi, 0.4%. TD Bank levied the greatest percentage of deposit service charges among large banks, at 8.9% of their operating revenue. The bank in June, debuted a deposit account that doesn’t allow customers to overdraft. In a similar vein, Bank of America launched SafeBalance Banking in 2014, an account that also doesn’t charge overdraft fees by default. In the past year, the popularity of SafeBalance Banking surged by 40%, and more than 3 million accounts have been opened, Bloomberg reported. “We want to give clients the solutions to be able to avoid these kinds of fees wherever, whenever possible,” Steve Boland, Bank of America’s president of retail, told the wire service.
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