Bank Of America Easing Up On Hated Overdraft Fees

NEW YORK, NY – APRIL 16 : A man uses an ATM at a Bank of America branch on April 16, 2014 in New … [ + ] York City. As the nation ‘s second-largest bank continues to struggle with side effect from the fiscal crisis, Bank of America reported a $ 276 million first-quarter loss Wednesday. ( Photo by Spencer Platt/Getty Images )

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The second base largest U.S. bank by deposits, is finally reducing its explanation overdraft fees. Bank of America is cutting those annoying overdraft fees from $ 35 to $ 10 starting in May. When you look at the Black community, they make up 18.2 % of the unbanked and 31.1 % of the underbanked group in the U.S., according to the Federal Deposit Insurance Corporation. Reducing overdraft fees could help Bank of America have a bigger stake with this demographic and start helping to close the racial wealth gap .

The Breakdown You Need To Know: Trying to make a dollar out of fifteen cents is only getting harder for the largest consumer bank franchise in the nation, CultureBanx noted particularly because overdraft fees provide a good beginning of income. Bank of America noted that by cutting overdraft fees, this will decrease revenues the depository financial institution earns by 97 % since 2009 in this category. many banks froze the fees they charged customers during the first year of the pandemic, and the diligence still booked record profits. In 2020, underbanked consumers spent $ 30 billion in bank overdraft fees .

A Bankrate surveil found that Black adults report shelling out an average of $ 12 a calendar month for checking accounts at banks or credit unions and Hispanics are paying $ 14 a month, on modal. extra bank fees heavily contribute to the growing racial wealth gap. The Federal Reserve ’ mho 2019 Survey of Consumer Finances, found the median wealth for a White family was $ 188,200, compared to $ 24,100 for Black families and $ 36,100 for hispanic families .

Lisa Servon, a professor at The New School, found consumers preferred payday lenders because using bank fees turned out to be indecipherable and more expensive. “ The deposit diligence needs to develop unlike tip and service structures designed to accommodate lower income depositors, ” said Servon .

Finesse-ing Financial Fees : last month the Consumer Financial Protection Bureau came out and stated it is looking at fees including overdraft, which it estimates net banks $ 69 billion in the third base quarter of 2021, and will issue new guidance aimed at curbing banks ’ reliance on them .
“ We have dependable fiscal solutions for clients without them having to rely on overdraft, but we will still have overdraft if it is needed, ” Bank Of America ’ s Holly O ’ Neill in an consultation .
other banks are besides trying to get ahead of regulation around fees. Capital One Financial will no longer charge accounts for not having sufficient funds to cover drafts. JPMorgan Chase said it would give customers more leeway before charging fees. regional banks including Ally Bank, PNC, and Santander are among the big regional banks to efficaciously eliminate overdraft fees starting this class.

What’s Next: The bank will besides drop its bounce check policy in campaign to appease customers. In February, Bank of America will besides stop charging insufficient funds fees .

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Category : Finance

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