Bank of America (NYSE: BAC) announced that customers will soon be unable to spend more money than they have in the checking accounts that are linked to their debit cards.
The move made by the Charlotte, N.C. based bank is a step that may become increasingly common among banks as regulators move to limit overdraft fees.
New rules which will take effect on July 1 set by the Federal Reserve will actually bank banks from charging such fees without first getting explicit permission from the customer,
For ATM transactions, customers that try to take more money out than they have will have to agree to pay a $35 overdraft fee before they can take out any money.
“The majority of our customers who overdraw their account do so with everyday debit purchases,” said Susan Faulkner, senior vice president of consumer banking at Bank of America. “They’re doing this unknowingly, because they aren’t aware that they are about to overdraft.”
The bank does not have the ability to notify customers at the cash register that they are about to overdraft their accounts and give them the option to agree to a fee, so instead the bank is planning on rejecting the purchases.
Bank of America’s new policy will become effective on June 19th for new accounts and in early August for existing accounts. The new policy will replace Bank of America’s current strategy which allow for overdrafts to go through and then only charge a fee if the customer’s account balance is below negative $10.00
