Bank of America is going ahead with a new overdraft policy, announced Wednesday, intended to protect customers by avoiding account overdrafts. This action comes in advance of the Federal Reserve’s July 1 deadline for banks to comply with new opt-in overdraft regulation. Overdraft fees are a more than $100 million dollar business for banks, so a large decline in profits is imminent. This begs the question, what are these institutions banking on to keep their revenues a float? For Bank of America, overdraft protection plans may be the new revenue earner. For consumers, they may not yet be as protected as hoped for.
As of February 22, 2010, new consumer protection regulations have swept through the credit industry and have re-defined policies from fair allocation of payments (balances with the highest interest rate can now be paid off first) to the elimination of fees to pay your bill. Transparency of repayment terms and various other protections have seemingly given consumers the upper hand, but banks may recoup their lost revenue from consumers with other hidden fees in the foreseeable future.
In days before the CARD Act took effect, BofA’s 2009 end-of-year earnings report reflected that consumer protections are not at all complementary to the bottom line. In a statement the bank stated, “Within Global Card Services, the provisions in the CARD Act are expected to negatively impact net interest income … and card income due to restrictions imposed on certain fees.”
Now, with new opt-in overdraft rules, this bait-and-switch tactic of commercial banks has again the opportunity to fester. After all, if banking isn’t a profitable business, overdraft fees are. According to the banking giant’s own figures, Bank of America revenue totaled $119.64 million dollars by end of year 2009, of which “service charges” accounted for $11.04 million. The Financial Times recently reported on Moebs Services’ survey estimating that U.S.-based banks make $38.5 billion in overdraft fee revenue, as these fees account for more than 75 percent of service charges to account holders.
The Loophole
Bank of America’s new overdraft policy seemingly eliminates all overdraft fees. However, the loophole lies in the bank’s overdraft protection services, which appear exempt from CARD Act legislation and do not seem to be going away anytime soon.. In accordance with Bank of America’s policy, if a customer does not have enough money in their checking account that is associated with their debit card at the time of purchase (also called the point-of-sale), the charge will be declined. And by the wizardry that is banking, no overdraft fee will be charged. However, if a customer has an overdraft protection plan linking a savings account to the checking account, funds will be transferred from the savings account to cover the charge – at a cost. The savings account will be charged $10 dollars for all overdraft transfers in one business day. Should the customer have a credit card associated to the checking account instead, this same $10 dollar fee is imposed plus interest. By now you should be thinking, “Wait, I am being fined on one account. To pay for a charge on another. With my own money?” The answer is, yes.
Once the Federal Reserve new opt-in overdraft rules are effective July 1, all banking institutions will be required to notify customers of their policy.In the meantime, if you are looking for clarification, don’t expect to find it on the BofA customer service site:
But wait, there’s more. Another “hidden” overdraft fee has made its way onto Bank of America customers’ bank statements. Mid-year 2009, Bank of America created an Extended Overdraft Item Fee. For accounts overdrawn for a period of five days or longer this $35 dollar fee is charged once. According to a Bank of America statement, “The [$35 dollar fee] is in addition to Overdraft Item Fees and NSF: Returned Item Fees.” A nameless call center customer-service representative confirmed that although these fees have been charged to customers since mid-2009, a letter of notification has yet to be sent to all. In effect, the new opt-in overdraft rules have been designed to protect consumers from such unexplained, impromptu fees and charges.
Overdraft Item Fees, Not-Sufficient-Funds: Returned Item Fees, Extended Overdraft Item Fees, Overdraft Protection Transfer Fees… and now you are thinking “Sooo, that’s why it’s called a $50 dollar latte…” The answer is, YUP!
Have you ever been charged an outrageous fee by your bank? Share your story below…
Take the time to protect yourself, as a consumer, with knowledge of credit cards, checking and savings accounts that are out there. See a comparison of credit cards and savings accounts at BillShrink to help keep those fees at bay and a few more dollars in your wallet.
{ 19 comments… read them below or add one }
Just got home from my bank, National City, Now a member of PNC. What a great surprise for a friday afternoon! $-263.45! Oh, and why? because I over drafted on a dollar a day movie rental box. It wasn’t even a good movie, and it cost 263 times more then advertised. I am closing my account tomorrow, as soon as I become the pariah of my social group because I can’t afford to visit anyone, or leave the house, or even breath. Not to mention the straining relationship with my parents because they are the only ones I can borrow money from, not like they have jobs, because of the bank bailout has strained the economy so much that no one is hiring! Thanks PNC for ruining every aspect of my life, negating any paycheck, (thats 2 weeks of work,) and ruining America!
I have repeatedly requested an explanation bank of america for hundreds of dollars TAKEN OUT of my account, yet listed as REVERSAL of overdraft fees!?!? This has occurred each month October 2009-February 2010. Because according to my records I’ve had anywhere from $200-$800 more in my account than is recorded by the bank AND I hadn’t normally used online banking, I went ahead & paid my bills putting me even further into the red with more $35 charges. They are eager to explain those fees. “Well you wrote ck#??2 for $0.02 when you were overdrawn” They keep going back to explaining those fees but not the fees they’ve charged that put me in the position of being overdrawn. Finally, I checked & saw I was overdrawn for nearly $600 that appear to be charges for cks I TRULY did write, because I had no idea that strange fees came out earlier in the month of February so I didn’t take my modest monthly income anywhere near the bank.
Now I’m told that after 120 days of being overdrawn the bank will report this info to something called “checksystems” and I will be unable to open checking account at any financial institution.
Isn’t there some way to stop them from taking my money without MY being penalized?
I’ve had no heat or hot water for 2mos because of this seemingly criminal activity on the part of bank of america.
I made purchases for $4.59, $14.25 and paid a bill for $47.28 using BANK OF AMERICA debit card. I had debit balance when these transactions were made however that night unexpectedly another credit card bill for the amount of $86 came for payment and this resulted in four overdraft charges for $35 each. By the time I realised and called bank stop payment for a phone bill to stop another $35 fee as I deposited money. Consumer support representative said she can’t stop payment though I made call before 5PM and this resulted in another overdraft $35 fee + $35 some other charge they applied on top of it all these. Its shame on part of bank of america to collect six over draft charges with hidden charges without customers approval for these services. This kind of dubious charges push consumers into more red. This is the same bank saved by our tax dollars and coming after to bite us what a shame?
Yeah BOA just robbed me for $350.00 as well. I’m switching to a small credit union and I recommend everyone do the same. The longer we stay with “bigbank” and let them rob us the more they will feel entitled take from us.. It time to let them know its is us the consumer with the power and without OUR hard eared money they would not exist. So find your local Credit union and stop this NOW!! or just switch to cash..
I work for one of the big banks you all cry about. I’m at the branch level so I hear people like you complain about how we rob you blind when you overdraw an account. But when I ask you if you ever balance your checkbook using the resources made available to you at no charge (online banking, monthly statements, phone services, etc.) you look at me like I’ve asked you if you’ve ever killed a family member. Grow up.
I know the bank can be kind of nefarious. I don’t agree with everything we do (pay large items first so that more overdrafts can be charged on smaller items) and I know the fees can be high ($35 for each overdraft) but what I keep hearing is that the bank should be providing you an interest-free loan because you’re too lazy to make sure your outstanding items are covered.
We all make mistakes. I’ve overdrawn my account on occasion. But they were my mistakes. I didn’t blame the bank. And I paid the fee. (They don’t reverse employees’ fees; they hold us to a higher standard.) Most of our customers do not abuse their accounts–the majority of overdrafts come from only 14% of our customers. And the writers I’ve been reading seem to fall into that group.
Oh, and go ahead and switch to your small credit union and see what happens when you overdraw your account there. Don’t think you’re escaping the problem. You’re just taking it somewhere else.
Sir
You clam that 14% are the only people that overdraft. Ok, I can agree with that. However, tell me why when I use the so called free resources to balance my checking account I still get overdrafts even thou, I show positive in all cases. If I were to opt-out of the protection (Which I already have) I wouldn’t (and haven’t) get any overdrafts again. This is weird isn’t it? Because you clam we can’t count our money, but trust me sir, we can count more than the bank can it seems. I see what the banks do, I never spend more than what I have, however, when I put money into my account, or money is put into my account my available balance is shown right away as being enough for the things I buy. For instance, my check goes into the bank, I see my available balance as being 500 dollars, I make a 350 dollar payment to my rent, a 20 dollar gas purchase, plus some small purchases say 3 totaling 10 dollars. All on the same day, funny how banks will take all the debts out first, and leave the credit pending for 2 days. So I go negative 175 because by now the credit posted, but the fee’s remain. Than when I call, all I get is how the money that I worked for was not really there in my account, because it was pending. Yet if it was not really there, than how was I able to pay my bills, put gas in my car, and buy 3 things? Makes no since. So when I balance I spend total 380 dollars, with leaves me 120 dollars. Yet because it was held up pending, and you take debts first and not credits I end up owning the banks 175. It’s useless to balance a check book when the online banking lies to you. I have learned that I must wait an extra day or two for my HARD EARNED Money to clear, before I can spend anything, even though I am suppose to be paid on Friday, I got to wait until Monday, otherwise any purchase I made throughout the weekend is not covered by what I got paid. That is fraud, and cleverly you cannot be sued over it because of the loop holes, and rules that high priced lawyer that we have paid for come up with.
so i got a bunch of fees for overdraft when i HAD THE MONEY in my account. Due to a waitress swiping my card, putting in the wrong payment amount and canceling it in the same transaction the bank INSISTS that even tho NO EXCHANGE OF FUNDS occurred in that transaction the following 3 transactions ($2 each- coffee- that actually occurred before the mistaken swipe) i somehow am still supposed to pay more than $100 in fees for umm what’s that? no reason? yea. my check book register WAS CORRECT THE ENTIRE TIME oh and i work at a bank too asshole so why don’t u stop talking down to ppl and realize that sometimes it is plain out stealing to put fees on accounts that are dubious and unjustified bc I keep my accounts straight. so to charge overdraft fees to an account that was NEVER OVERDRAFTED is… ludicrous… so to everyone out there BANK OF AMERICA WILL RAPE YOU REPEATEDLY they’ve done it to me more than once and no it is not bc i expected them at any point to cover charges when there were not funds in the account- bc point blank the money was there.
Are you kidding? The whole point of the online banking system is to make life easier for busy people, balancing our check books religiously is one of those task we seek to eliminate. Banks such as USAA make sure every purchase is automatically accounted for even those pending charges will come out of your balance, how freaking hard is that! Also they do not let you pull money out or make purchases once your account is empty. If I wanted to go back to balancing my checkbook each time I make a purchase I WOULD just go back to using checks and bank with a small credit union that will at least know my name and give me better interest rates.
Also, I love how you point out what you don’t agree with about the bank you are defending because that is all we are doing as well. We don’t like the EXCESSIVE charges on overdrafts, a 20 dollar fee for over-drafting is understandable, as you pointed out we DO NOT expect to get loans for free. But 35 dollar fees for 1 dollar overdrafts and said fee continuing to be charged if that 36 dollars doesn’t get paid, that my friend is what we call robbery.
Bix,
It will be so funny when the government comes down on the banks for how they cheat people and you lose your job. The banks executives use dummies like you to defend their bottom line, they would not hesitate to let you go in a heartbeat. And for your arrogant attitude, it will come back to bite you in the rear.
Too funny!!!!!!!!!!!!!!!
Hey Bix, I overdrew my account because I didnt make my deposit on time I paid $150 in overdraft fees and was still overdrawn by $5. I borrowed $5 and deposited it bringing my account up to +.31. Guess what BofA charged me another $35 dollars extended fee for taking 4 days to come up with the $5. My car payment deposit went in and was paid but I was charged another $35 because I was overdrawn because of the extended overdraft fee. I called customer service and was told that nothing could be done. I know I made the original mistake but I think I have paid enough! Being right doesnt mean your being reasonable. I cant make a deposit until next week meaning I will be charged again and no one at Bank of America offered to hold the charges until I can catch up. So PEOPLE LIKE ME just shouldnt have bank accounts I guess. Maybe your bank should close the accounts of the %14 you revile. Oh no, that would cost your blood money revenue. Karma, baby, Karma.
Isn’t there a way we can sue bank of america?? i see they were sued before because of the things they were doing
I just had a talk with Bofa’s customer service. I opted out of my Overdraft service months ago and last week i check my mobile banking and i do have sufficient funds in my account so i went and use my debit card not knowingly that after that day Bafa charge me with several overdraft fees. They claim that the mobile banking is not accurate and they do not know the amount of money that was in my account. They put the blame on me that i should know how much i have and how much i spend!!! how can i keep track of every dollars i spend when i have to worry about a million things. Anyway, i would like to sue them since i think it is not fair. First they are my bank they should provide the service and it is my money i should be alert if i have sufficient fund or not. I don’t think their excuse that the mobile banking is no the most accurate is right. Could any one be kind enough to advice me how to proceed??
@ bix Your bank will hold small charges for a week
waiting for us to trust that the statments they show .. Then nail
us to the wall.. How come they now charge stores .90 cents for debit
card use??? They set this up like this for a reason.. It’s to legally steal from people.
How is it that when people use the card -it checks for funds
and allows the payment.. Yet it can’t remember it.. Until the bigger payment comes out .. So 4 cups of coffee now cost $140
They are stealing money from people that need it the most .. Children suffer for what you guys do… Don’t give me that bs about keeping track
of the funds crap.. You know exactly what’s going on! It is by the way
the way banks make the most money.. To everyone else.. Make alot of noise!! And do not stop.. It is the bankers that are/ have been killing our country..
My 72 yr. old mother has always kept up with finances. She documents when she deposits funds and when she spends her hard earned money. Today, my mother is over $800.00 negative!! She is furious and so am I! Her statement is difficult to understand, all I see is $35.00 fee’s. She’s positive and then negative, how this has happened I’m not for sure. But someone at Bank of America is going to have a very, very bad day. Read all the commits and I HIGHLY doubt that only 14% of Bank of America customers are responsible for the overdraft fees, considering that in 2009 BOA had “service charges” of $11.04 million. Get facts straight guy from the “branch level”. I bank at Woodforest National Bank and I DO NOT get charged a monthly service fee, and a bank rep. personally called me to let me know that my electric bill came through, I had four items pending already and when this goes through I would be neg. She also informed me I could come in and deposit my negative amount before end of their business day (7:00) and I would not incur any fees. Now this is a bank willing to help their customers, notify them by phone about their account status, and has great hours (9:00-7:00 Mon-Sun!!) and no I don’t live in a small town, a large one (Dallas) This bank has the right idea, to serve and protect their clients and their clients money! Maybe BOA should follow suit. They lost my money long ago and now my mothers and sounds like many more to follow.
Its a bunch of BS. These charges are merely for profit. I understand a charge but $35.00? Come on! Loan sharks and/or the mob don’t even charge that much interest. The charge is usually on a transaction less than $5.00. (for me anyway). I had four $35.00 charges on $1.86 item and so on. If I loaned someone 1.86 and charged them $35.00 the next day or a couple of days later they would lock my azz up for loan sharking! If its not legal for private citizens to conduct those practices then it should not be legal for banks! How do we stop this unjust BS?! And they wonder why people are loosing their mind in this recession.
Thomas Jefferson said in 1802:
‘I believe that
banking institutions are more dangerous to
our liberties than standing armies.
If the American people ever allow
private banks to control the issue of their
currency, first by inflation, then by
deflation, the banks and corporations that will
grow up around the banks will deprive the people
of all property – until their children
wake-up homeless on the continent their fathers
conquered.’
what i am confused is that i was never overdrawn, and got accessed 3 35.00 overdraft fees
i spoke with a rep today and she said no fees will be coming
i cashed a check and then deposited it into my checking account
i got popcorn at a movie theater and went to chilis – 6.48 and 6.50 at the time my account was not overdrawn – it deducted it from availbale balance but it deducted it from availbale balance 2 days in a row – and the balance did subtract when it should have subtracted once – still no in the red
after i cashed the check looked at my iphone and it stated 114 of so balance
so i went to the apple store and got an ipad case – that cleared and deducted
i made a payment to my credit card of 50
never did the mobile app say i was in the red
i go by availbale balance
bank of america did not go by availbale balance
said i was overdrawn 3 times when i never was and the availbale balace inlcluding the pending transactions and after the pending transactions not in the red – never was
not sure i am getting 105.00 in overdraft fees when i was never overdrawn
and 2 why charge me 2 days in row for chilis and popcorn when i only went once
also the cashed check showed and teller said it was available
plus there was 115.00 check made – but that posted so im in the black now?
but could another overdraft fee because of 2.40 at mcds
how is there any ovedraft fees when i was never overdrawn ever
i go by availbale balance
did bank of america
yes the outstanding debits etc has been deducted and taken out
wasnt overdrawn after they were taken out
so how can say i was overdrawn
I have been banking with Bank of America since I was 16 (10 years). I am an active duty member of the US Air Force and have had multiple problems with my pay (as is the norm with military finance) each time incurring ridiculous charges from Bank of America when automatic payments would go through. The most they have ever done is stop more overdraft fees from coming out. Months ago I attempted to change my direct deposit from the military over to a USAA account (a process which should have only taken 2 pay periods to complete) as I was completely fed up with B of A. However, the change never went through and I continued to have my pay check deposited into my B of A account. Unable to find the time to argue with my military finance office I just gave up and continued using my B of A account. Now, several months later, the military has decided to honor my original request and deposit my pay into the USAA account. $200 in automatic bill pay came out before I even knew this had occurred, I could not pay it then and am still waiting for my next check (Military members get paid on the 1st and 15th) to be able to pay off the fees which have now reached a ridiculous $722, this is nearly half my pay check! I tried calling them several times to at least avoid further charges but they will not even try to work with me. Any suggestions as to how I can go about fixing this would be greatly appreciated.
Call 1-866-901-9856- Overdraft Customer Assistance- they are willing to work with customers in regards to Overdraft Accounts