Both banks will eliminate charges for non-sufficient funds in customer accounts, they announced on Tuesday. Bank of America will also reduce overdraft fees to $10 from $35 beginning in May while Wells Fargo will give customers a 24-hour grace period before incurring such costs, starting in the third quarter.
Overdraft fees have
“This will ratchet the pressure up on other large national and regional banks to take similar steps,” Bankrate.com chief financial analyst Greg McBride said of Bank of America’s measures. “You can bet this topic will come up on quarterly bank earnings calls.”
Bank of America will scrap non-sufficient funds fees starting next month, the Charlotte, North Carolina-based company said. The bank will also eliminate the transfer fee associated with its Balance Connect for overdraft protection service in May.
“These latest steps will further support our clients and empower them to create long-term financial wellness,”
Wells Fargo
“Core to Wells Fargo’s evolution is making sure we stay focused on our customers, first and foremost,” said
Neither lender went so far as competitors such as McLean, Virginia-based Capital One, which has eliminated overdraft fees entirely.
A typical overdraft fee is around $35 across banks. The charges, which generated roughly $15 billion a year for U.S. banks before the pandemic, are levied when customers spend more than they have in their checking accounts and the bank temporarily covers the difference.
Across the banking industry, revenue from overdraft fees has fallen after a period of steady growth before the pandemic. In 2020, the amount plummeted as consumers cut back on spending while stuck at home because of Covid-19 and banks offered waivers on the fees for customers hurt by the pandemic.
(Adds Wells Fargo measures from first paragraph.)
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