Banking regulators have taken aim at overdraft practices in recent months. Rohit Chopra, the director of the Consumer Financial Protection Bureau, has said many lenders have become “hooked on overdraft fees” to feed their profits. The acting comptroller of the currency, Michael J. Hsu, has said the charges disproportionately affect vulnerable customers.
Bank of America’s plan is the most aggressive among the biggest banks, but smaller banks have gone further: Capital One and Ally Financial eliminated fees for overdrafting last year. Some lenders have introduced less-punitive alternatives to the fees, like grace periods or small short-term loans.
JPMorgan Chase, the country’s largest bank, said last month that it planned to give overdrawn customers an extra business day to raise their balances to within the $50 “overdraft cushion” that prevents fees from being charged. Even before Tuesday’s announcement, Bank of America was offering strapped customers loans of up to $500 that must be repaid over three months.
“This is a very strong program that creates both limits, guardrails and the supports that people need to get through cash crunches that are going to continue to come to many working families,” Mike Calhoun, the president of the Center for Responsible Lending, an advocacy group that promotes financial fairness, said in an interview.
The nonprofit, which was among the community groups consulted by Bank of America on the new policies, has urged all financial institutions to eliminate overdraft fees.
Article source: https://www.nytimes.com/2022/01/11/your-money/bank-of-america-overdraft-fees.html
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