What a relief! Bank of America customers can say sayonara to overdraft fees. The folks over at Wallet Pop reported the news late Tuesday as the colossal financial institution announced an end to letting customers spend more money than they had in their accounts.
BOA’s new debit card policy will kick in mid-June for new customers and August for existing cardholders. So instead of being charged $40 for that $6.99 BLT you thought you could cover, you simply won’t be able to make the purchase –rejected on site! Hey, it beats having to come up with extra cash ‘cause you wanted a sandwich.
Banks raked in $38.5 billion from overdraft and insufficient fund fees in 2009. Debit purchases account for roughly 60% of BOA’s overdrafts.
“What our customers kept telling me is ‘just don’t let me spend money that I don’t have,” said Susan Faulkner, the bank’s deposit and card product executive, who says the change in policy is part of a broader push to build trust among BOA customers. “We wanted to help them avoid those unexpected overdraft fees.”
In the months leading up to the implementation of the White House’s CARD Act, many banks became unscrupulous, hiking fees and lowering credit limits. Perhaps our bailed out brethren on Wall St. have finally had a change of heart? Only time will tell.
Either way, the policy is long overdue. Automatically giving customers overdraft protection, where purchases are cleared while they continue to spend and rack up exorbitant fees, made no sense to anyone but the banks. Sure, as consumers we must also do our part and keep track of our spending, but how hard is it to decline a purchase when funds are not available? This move will undoubtedly put money back into consumers’ pockets, and the sheer embarrassment of having a purchase declined at a grocery store or on a weekend shopping spree is enough to keep even the most haphazard spenders on their toes.
What’s your opinion? Do you think other banks will follow suit? Do you think the absence of this revenue stream means additional fees elsewhere?
Renita Burns is a staff writer at Black Enterprise.