Ally Bank Is Ditching Overdraft Fees
Ally Bank customers who overdraw on their accounts will no longer be hit with a $25 fee. The bank announced Wednesday that it will be eliminating overdraft fees on all accounts. There are no requirements or restrictions and every Ally customer is eligible.
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“Nationwide, more than 80% of overdraft fees are paid by consumers living paycheck to paycheck or with consistently low balances — precisely the people who need help stabilizing their finances. Eliminating these fees helps keep people from falling further behind and feeling penalized as they catch up,” said Ally Financial CEO Jeffrey Brown, as reported by CNBC.
Overdraft fees are one of the most expensive and common checking account fines, reports CNBC. Banks and credit unions typically charge a maximum of 6 to 12 overdraft fees per day per account, although a few allow up to 12 in a single day, according to data from ValuePenguin.
Americans paid $12.4 billion in overdraft fees in 2020 and 95% of those consumers were “financially vulnerable” and a majority belong to minority groups, said Ally, using data from the 2021 FinHealth Spend Report. CNBC also noted that 5% of checking account holders overdraft more than 20 times per year, according to the Consumer Financial Protection Bureau.
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Diane Morais, president of consumer and commercial banking at Ally Bank, told CNBC that Ally has just under 2.5 million banking clients and only about 1% have been subject to overdraft charges. During the pandemic, Ally waived these fees and CNBC reported that going forward, smaller transactions will likely be approved, but larger transactions may be declined, according to Morais.
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