Bank of America overdraft service fees dropped 90% over the last two months

Photo (c) Iryna Drozd - Getty Images

Fees aren’t completely going away, but they’re getting much more manageable

The overdraft fee bonanza may be coming to an end for U.S. banks. When the Consumer Financial Protection Bureau (CFPB) raised its voice about fees earlier this year, the message was apparently heard loud and clear. On Thursday, Bank of America demonstrated proof of the agency’s action.

The company announced that it has made a sizable, customer-favoring shift for its 35 million consumer checking account holders. The bank said fees related to overdraft services declined by 90% in June and July when compared to the same period in 2021. June and July were the first two months after sweeping changes related to these services were implemented.

That comparison is hefty, too. According to ConsumerAffairs' research, Bank of America's overdraft fees accounted for 1% of its revenue in 2021. One percent may seem insignificant, but it comes out to close to $320 million. Now, for the second quarter of 2022, consumer client overdraft fees made up less than 0.4% of the company’s total revenue.

Things will likely get even better if we’re to take Bank of America at its word. In making its announcement, the company said new solutions and enhanced programs introduced over the last decade will reduce consumer overdraft fees by 97% from 2009 levels by next year.

“For more than a decade, Bank of America has invested heavily in supporting our clients’ financial health through industry-leading solutions and ongoing enhancements to our overdraft services,” said Holly O’Neill, President of Retail Banking, Bank of America. “Our scale, client focus and technology investments have allowed us to adopt policies and innovate in ways that help clients manage their everyday finances and liquidity needs on their own terms, while also delivering for our shareholders.”

Fees aren’t going completely away

Bank of America customers should note that the company is not completely eliminating overdraft fees; it's just reducing the amount that consumers have to pay. As part of its recent actions, customers now only pay $10 for overdraft fees instead of $35. 

However, customers can get around those reduced fees through Bank of America's SafeBalance checking account. The program costs $4.95 each month, with exceptions for students, people under age 18, or customers who are enrolled in the bank’s Preferred Rewards program. 

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