Bank of America (NYSE: BAC) announced that it will cap the fees it charges when customers overdraw accounts and place an annual limit on the number of times a customer can overdraw their accounts on point of sale transactions. The move come just less than a year after the bank had hiked many similar fees.
The changes will be implemented in two stages, with the first coming October 19. At that time Bank of America will no longer charge an overdraft fee if a customer account overdrawn by $10 or less for one day. The bank will also not charge overdraft fees on more than four items per day.
Come June 2010, Bank of America will implement an annual limit on the number of times a customer can overdraw an account on point-of-sale transactions. The bank will also begin contacting customers who are approaching their annual limit in order to advise them in way to better manage their banking.
Bank of America also plans in June 2010 to start giving new customers the choice to opt out of overdraft capability when first opening their account. Currently new customers are automatically enrolled in the overdraft program.
The bank said it plans to improve the process that allows current customers to opt out of the overdraft program as well.
“Our immediate priority is those customers who excessively overdraw their accounts,” said Susan Faulkner, a Bank of America Customer Segments & Deposits executive, in a press release. “With these changes, we have increased customer choice in the area of overdrafts, limited daily overdraft fees, and significantly reduced fees for those customers who need help the most.”
The actions Bank of America is taking mainly pertain to debit cards, which do not operate under the same laws as credit cards. Recent legislation that changed the way credit card companies can operate in regard to rate increases and magnitude of late fees has let consumer advocates’ focus on the debit card arena.
The hot topic really is the allowance of multiple overdraft charges in one day on point-of-sale transactions. If a customer is unaware that their account is overdrawn and makes several more purchases in a given day, the account is hit with a charge for each transaction.