You will no longer be able to spend what you don’t have in your Bank of America account. The surprise overdrafts and the subsequent hefty fees will soon become a thing of the past over with your Bank of America debit card point of purchase transactions. Bank of America has announced elimination of overdraft fees on such debit transactions, and this will come in effect from June for new accounts and from August for existing accounts.
The implementation of this new rule will cost Bank of America dearly. The overdraft fees meant hundreds of millions of dollars in revenue for the bank. Preventing account holders from making these overdrafts will lead to loss of this huge chunk of revenue.
The move is likely to get a mixed reaction from the customers. Those who might have unknowingly and unwillingly been forced to pay the overdraft fees in the past will be happy at the announcement. This will also help customers better manage their financial situations and not get unpleasant surprises later. But this also means the loss of an option for the customer to overdraft on his or her account. For some, it might even be embarrassing to have their debit card declined and returned back while trying to make a purchase.
For customers who still need this service, Bank of America will suggest indirect ways to provide the overdraft facility. Customers would be able to link their checking accounts to their savings or credit account, which would support payments that a checking account cannot handle. However, this service will come at a price.
At the ATM machines, the customers will still have the option to withdraw the funds they don’t have yet by opting for the overdraft and agreeing to pay the associated fees. In case of checks already written and automatic debits, the accounts will still be hit with the fees.
The move has surprised many industry experts, especially in light of the revenues that overdraft fees generated for the bank. The bank representatives have said that the decision was made based on the feedback of their customers who didn’t want to take on the burden of overdrafts.
The expectation is that the step would instill trust in Bank of America customers. The bank has in fact gone beyond what was needed by the CARD Act, which will come into effect starting August. The Act will require banks to offer their customers the option of protection against overdraft charges.