Big win for the consumer: BofA and Chase revising debit card fees
Great news reported by the NY Times today in an article about Bank of America and Chase Bank’s intention to change their debit card fee structure.
As I mentioned in a recent blog post of mine, Beware of the Hidden Costs of Banking, many consumers have suffered hundreds of dollars of overdraft fees coming from a few very small-dollar transactions after an unfortunate timing incident regarding a deposit.
The article today reports, among other things, that two of the largest banks will be taking the following steps very soon:
Bank of America:
- Will soon allow customers to “turn off” the ability to spend beyond their bank balance
- Beginning next summer will limit the number of times a customer can exceed their balance using a debit card at a store in a given year
- Will cap the number of daily overdraft charges at 4 per day
- Will stop charging any fees for customers who overdraw their accounts by less than $10 in a single day
Chase:
- Will stop processing all of a day’s debit card transactions from largest to smallest, thereby increasing the number of transactions subject to their overdraft fee, and will instead process them chronologically
- Will allow customers to “disable” overdraft coverage on their accounts, thereby stopping them from using beyond the balance in their accounts, which now results in huge fees piling up
- Will cap the number of daily overdraft charges at 3 per day
- It will stop charging fees when accounts are overdrawn by less than $5
Pressure from regulators and legislators has been building for a while now for banks to improve their debit-card fee policies to be more consumer-friendly, and Bank of America and Chase Bank’s announcements are likely designed to head off, or at least reduce, the current and future bad press they are getting on this issue.
Nonetheless, this is a big win for the consumer.
And other banks will undoubtedly begin to follow suit, even if it is a source of literally tens of billions of dollars for the banks right now. Increased customer frustration and negative press will take a toll on their business over time if they fail to continue addressing this issue.
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