I think the banks are scared.... Chase & Bank Of America cut overdraft fees

[Statistical]

NEW YORK (Reuters) - JPMorgan Chase & Co said on Wednesday that it was eliminating some overdraft fees altogether and trimming others, after Bank of America Corp announced a similar move on Tuesday.

The changes follow U.S. congressional leaders' criticism of bank account fees and come as the banks digest rule changes for credit card fees.

New York-based JPMorgan said it made the changes, which include removing overdraft fees if a customer's account is $5 or less overdrawn, in a bid to help its 25 million debit card customers amid the recession and rising U.S. unemployment levels.

The second-largest U.S. bank is also ending overdrafts for debit cards unless the account holder opts into an overdraft service, and it will start recognizing debit-card transactions and cash withdrawals as they occur, according to the statement.

Bank of America, the largest U.S. bank, said it was reducing overdraft and other account fees over the next year.<[br />
http://www.reuters.com/article/domesticNews/idUSTRE58M2TE20090923

From another article....

Beginning Oct. 19, Bank of America (BAC, Fortune 500) says it will allow customers to opt out of the ability to outspend their accounts, and it will no longer charge fees for more than four items per day or on overdrawn balances of less than $10.

http://money.cnn.com/2009/09/23/news/companies/bank_of_america_overdraft_fees/?postversion=2009092308

To all the BofA debit card holders be sure to "opt out" on Oct 19th. If you don't have money your card will simple declined rather than getting a $30 fee for the "convenience" of spending money you don't have.

Overdraft uproar. A report last month from Moebs Services said U.S. banks will collect a record $38.5 billion in overdraft fees this year, with nearly all the revenue paid by just 10% of customers. The windfall is nearly double the $19.9 billion collected in 2000, as overdraft fees tick higher despite the recession.

You don't cut off a $38 billion dollar free money faucet for no reason. Likely they are making these changes to avoid even more restrictive changes by Congress.

If it were me I would allow overdraft protection but:
a) it is 100% opt in. unless a separate agreement is signed by customer which clearly spells out fees all overages are declined at no cost
b) the opt-in is only good for 1 year. customer needs to re-opt in.
c) every overdraft charge requires a mailing to customer and the mailing has plain english language on how to opt-out
d) all charges for the day are ordered from smallest to largest to minimize charges

[MNDemNY]

1. Yup Scared of regulation. NO QUARTER !!! More regulation, please.

[lonestarnot]

2. I wonder how much it is costing them to defend themselves against complaints to the Comptroller of

the Currency.

[2Design]

3. Get out of banks into credit unions - pay off credit cards monthly or

move the balances to a new card with 0% purchase or other incentive and keep track and move money again or pay it off - must find a way to take care of yourself and against these mafia strong men who are willing to cut off your legs and life for their ceo to have a vacation - just remember they are loan sharks first, their spots do not change by acting as if they care. They don't care. They only care about money.

[laughingliberal]

4. Here's what I did

We have a bank account from which a couple of our recurring payments are drafted (auto insurance, cell phone). I didn't want to close it but I now only put enough in to cover those drafts each month. Then I went to one of the check cashing places in town and got a preloaded debit card. The fee is $9.95 per month and has no charge from the bank for using ATM machines at any location. It does not allow me to spend more than the money I put on the card and it can be used for paying bills by phone or internet and POS purchases. May not work for everyone but seems to be working well for us.

[2Design]

7. I work at earning $10 a month and not paying $10 a month

I get credit cards that have good rewards and offer initial money for using it and has 0% for six months or longer on purchases. Then I stop using all other cards and pay them off. Then as the time becomes one month before interest starts, I pay off the 0% card and get another one. I don't use atm's - I go to the credit union service center and get cash or I use my credit card for everything. I make money off of them if I can - I have a green checking account that pays interest right now. Better than CD's or savings. So that is where it is right now. I continually look for better, SAFE, ways to earn interest or money from others.

[shanti]

17. credit unions

charge overdraft fees too....my son has had it happen to him several times.

[dugaresa]

5. Here is why they likely did this

They are probably seeing a lot of folks transferring debts to other cards because people who get upset about a fee are more likely to do that.

Sometimes being too greedy backfires, so that fee they charged for overdraft results in a balance transfer to some other bank and they find themselves with no large balance to collect atrocious interest on.

People react to fees even more than the interest charged, strange but true.

[southern_belle]

6. American Express raised theirs! n/t

[LynneSin]

8. The comments you made at the bottom are 'two thumbs up'

No matter who your bank is - you need to know what your status is with overdraft fees including charges and impact to your credit rating and rates on your card.

The banks tried to sell us overdraft protection as some sort of amazing bonus that everyone should have but never told us the impact just one overdraft would have on us especially when it's our credit cards. Sure, I could be saved from the humiliation of having my credit denied in public. But that 5 minutes of humiliation hardly comparies to the money it will cost me to pay for increased interest rates on my card and penalties for using overdraft.

I found out about it by accident. I was buying a computer and had to return the first 2 I bought and silly me didn't realize the money wasn't credited back to my account for 2-3 days. I hit the overdraft protection on the 2nd computer but it was my 3rd computer when I realized that I was over my limits. I fought like crazy to get that mess cleared up and then insisted that all overdraft protection be removed from all credit cards. I would the cost of humiliation is much cheaper than the financial penalties.

The only place I keep overdraft protection is my checking/debit card since that goes into my savings account and only has a $5 fee for using it plus no impact to my credit rating or interest rate.

If you don't have Chase or BoA, then you need to check your overdraft protect and OPT OUT OF IT IMMEDIATELY. It is not worth the financial penalties.

[SOS]

12. RE: opting out

That is what we need.
But according to the NYT, 77% of national banks do not allow the customer that option.

It's good that these banks are doing this, but we still need the Dodd and Maloney legislation to pass.
All customers must have the right to decline "services" that we do not want.

[csziggy]

9. Last time we were in our bank they steered us to a new kind of account

With all the same benefits, no monthly minimum, no service fee, and reduced overdraft fees. We didn't ask about a change, the bank officer simply offered it to us. I guess as long time customers who have a good record she felt we deserved some consideration.

That is a change from when I asked a previous bank about a change to an account and she basically told me that if I wanted something different, I should change banks - so I did.

[LeftHander]

10. Partner and I closed all account with TCF for fee shenanigans...

We have been very burned by Chase bank's overdrafts and my personal account was just recently sent into the red by transaction stacking.

As a bank account holder and user of mobile and internet technology we as account holders demand ACCURATE BALANCE REPORTING!!!

The debit card is now ubiquitous and it makes good sense to block NSF transactions from occuring. I am all for that.

i.e. DEBIT only transactions on DEBIT cards. Credit transactions are allowed on DEBIT cards and that can cause huge problems for people who use debit cards instead of cash...

The stacking of transactions still needs to made against the law.

[Nuclear Unicorn]

11. Banks: Running out of money is gonna cost you...BIG

Consumer: Um-m-m...but I'm already out of money!

[Hosnon]

13. Heh. Were I a Congressman I'd tell them "nice try". The only decided to change when regulation

became imminent. And when this issue disappears from the public discourse, so will these changes from the cardholders' agreements.

[Javaman]

14. It works like this...

1) they aren't scared. 2) they are doing this preemptively in hopes that no bill will require them to do it forcefully when the law makers see this "good faith" move by them 3) if the bill doesn't materialize, after a period of time, they will reinstate the over draft fees.

rinse and repeat.

[4_TN_TITANS]

15. Nobody in Congress would scare their hands out of the cookie jar

My guess is the WH is pressuring them to ease up on people.

[spanone]

16. making a few token concessions will do nothing...