Chase and Bank of America Offer Relief from Overdraft Fees

Finally, a little breathing room for consumers who are reaching the bottom of their checking accounts.  On Tuesday both Bank of America and JP Morgan Chase, in response to a large volume of consumer complaints about high overdraft fees, made significant changes to their overdraft policies, reducing the amount of fees per day and eliminating fees for smaller overdrafts.

Pressures from regulators may have also led to the revisions; there has been talk in the Senate of passing a law that allow customers to opt-out of overdraft services, and the Federal Reserve has proposed that banks be required to ask permission before automatically enrolling customers in overdraft services.  While so far these changes are not a requirement and offer only adjustments to overdraft policies, both banks have expressed intentions of completely eliminating overdraft fees in the next year.

Bank of America and Chase Overdraft Policy Changes

Bank of America has also stated that it intends to roll out additional changes in June of 2010, including an annual limit on overdrafts, after which customers will not be able to overdraw.  Bank of America will also contact customers who are nearing that limit with money management advice, and offer new customers the choice of whether they want overdraft capability when they open an account.  While Chase currently does not offer the ability to opt out, it says it will provide customers with information on how to do this once the new system is in place.

Chase and Bank of America: Trendsetters in Eliminating Overdraft Fees?

By jumping the gun and making changes to their overdraft policies before regulations force them two, Bank of America and Chase are not only hoping to relieve some of the increasing pressure being placed on them by lawmakers, but also are throwing down the gauntlet for other major banks to change their overdraft fee policies.  As a service that brings in tens of billion dollars annually, many banks are going to be reluctant to give up revenue from overdraft fees, but may be forced to if consumers begin to flock to banks that eliminate fees for small overdrafts, or allow them to opt-out of the service altogether.

About the banks

 

Bank of America

Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other. It operates in 32 states, the District of Columbia and 30 foreign countries.

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Chase

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.2 trillion and operations in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity.

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