Bank of America overdraft fees reduced by 90% under new policy | Business

New at BofA overdraft fee policy has been implemented since June. Moynihan said that in the first two months of the policy, revenue from overdraft fees dropped by 90% and the bank saw fewer cases of fees being collected. He did not provide details on the number of cases.

“The rest (of people who get overdraft fees) are business owners who move money around,” Moynihan said. “They’re not personalities anymore, to be honest.”

Beginning in mid-2021, regional banks such as PNC and Capital One, as well as online bank Ally, have announced plans to eliminate or find ways to dramatically reduce overdraft fees. Most banks said the fees hit the poor and racial minorities the hardest, or that the pandemic showed banks they could make big profits by not charging their customers, explaining their decision.

While notable, consumer advocates saw the announcements as symbolic victories rather than substantive reforms for the industry.

However, Bank of America’s decision in January to eliminate the insufficient funds fee — sometimes called the check bounce fee — and to lower the overdraft fee to $10 has been credited with shaking up the industry. For years, BofA has been considered one of the largest collectors of overdraft fees and last year brought in just over $1 billion in such fees. Other banking giants such as Wells Fargo, JPMorgan Chase and Truist all changed their overdraft fee practices shortly after BofA’s announcement.

BofA’s overdraft fee revenue has been declining for some time as the bank has taken several incremental steps to reduce its reliance on fees. About half of all accounts opened at BofA are now accounts that do not allow the customer to overdraft. The bank took in $1.63 billion in overdraft fees in 2015, the first year banks were required to publicly report overdraft fee revenue to regulators.

“(BofA) is miles ahead of what Wells and Chase have done. They’ve both made some reforms, and we certainly welcome those changes, but they still charge a $35 fee,” said Mike Calhoun, head of the Center for Responsible Lending and a longtime critic of overdraft fees. Calhoun sits on an advisory board that includes several other consumer advocacy groups that advised BofA on the changes.

But regulators and researchers have noted a general decline in overdraft fee revenue since the pandemic. In the July report Consumer Financial Protection Bureau The researchers found that “industry-specific changes in overdraft program settings and other checking account policies make a significant difference in the amount consumers incur in different fees.”

AP personal finance writer Adriana Morga contributed to this report from New York.