Bank of America said Tuesday it would eliminate insufficient funds fees and cut overdraft fees from $35 to $10—the latest move from a large bank away from the practice amid years of pressure from critics who say the fees unfairly target vulnerable communities.
KEY FACTS
- Bank of America plans to end non-sufficient funds fees in February, and reduce overdraft charges by $25 in May, the bank said in a press release.
- The changes will lead to a 97% reduction in overdraft revenues from where they were in 2009, according to Bank of America.
- The bank said it has slowly reduced its overdraft fee practices, including cutting overdraft fees tied to debit card purchases in 2010, and creating a checking account that did not allow customers to overdraft in 2014.
CHIEF CRITIC
Critics have called for overdraft fees to be eradicated for years, saying they disproportionately affect people of color and people living paycheck to paycheck. Sen. Elizabeth Warren (D-Mass.) has been an advocate for eliminating the fees. She blasted JPMorgan Chase CEO Jamie Dimon for the bank collecting nearly $1.5 billion in overdraft fees in 2020 during a Senate hearing last year. “You and your colleagues came in today to talk about how you stepped up to help your customers during the pandemic,” Warren told Dimon during the hearing. “It’s a bunch of baloney.”
TANGENT
Capital One became the first large financial institution to completely end overdraft fees in December, joining some smaller banks that have moved away from the practice. Ally Bank announced it would end the practice in June, citing the impact on low-income Americans and people of color.
BIG NUMBER
$15.47 billion. That’s how much U.S. banks made from overdraft and non-sufficient funds fees in 2019, according to a report from the Consumer Financial Protection Bureau. Bank of America, Wells Fargo and JPMorgan Chase accounted for 44% of the total, Reuters reports.
