The House Financial Services Committee Chairman is pushing for legislation to change bank overdraft policies, many banks are beating him to the punch by adjusting policies on their own. Bank of America and J.P. Morgan Chase have already taken steps toward change, and Wells Fargo plans to do the same.
Here is a breakdown of the proposed changes:
- Bank of America will eliminate fees for customers if overdrafts are less than $10 within one day. BOA will also collect no more than four items of overdraft per day (previously it was 10 items per day).
- J.P. Morgan will stop charging fees for customers if overdrafts are less than $5 in one day.
- Wells Fargo & Co. plans to stop charging fees if overdrafts are less than $5 a day and also plan to collect fees on no more than four items per day.
Committee Chairman, Barney Frank (D., Mass), and Senate Banking Committee Chairman, Christopher Dodd (D., Conn.), are both planning to push legislation to change bank overdraft policies, such as requiring banks to request permission before enrolling customers in overdraft programs. The Federal Reserve is also considering strong restrictions on overdraft fees – this could be finalized by the end of the year.
In making changes, banks will lose significant revenue. According to a recent study conducted by the Federal Deposit Insurance Corp., customers are getting hit with fees that range from $10 to $38 a pop. This translated into an estimated $1.97 billion in insufficient-fund fees in 2006 alone, according to surveyed banks.
This is good news for consumers who have had problems with overdraft fees. Especially since so many people are struggling to manage their finances in this somewhat bleak economy. Until legislation is passed, hopefully more banks will make changes on their own.
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