The Bank of America has announced that it will soon stop permitting its customers to make overdrafts on their debit cards. The new policy will be phased in over the summer of 2010.
The move comes on the heels of new federal regulations that limit bank fees on overdrafts. The new regulations require a bank to get its customer’s permission before allowing an overdraft transaction with a fee to go through.
For ATM transactions, customers will soon have to explicitly agree agree to a $35 fee before they can withdraw more than their balance.
Because there is no fixed mechanism to get a customer to agree to a penalty fee while they are at a store register, attempted debit card overdrafts will simply be declined.
Consumers typically despise the debit fees, at least when they are imposed on minor purchases of a few dollars. People are more willing to pay the fees when the overdraft is to make a mortgage or car loan payment.
The fees are big money-makers for the banking industry, though, which now has to adjust to a new era of regulation. Acording to the Associated Press, banking analyst Robert Meara predicts that the banks next move may be to eliminate free checking accounts in order to make up for the lost fee revenue.
Bank overdraft fees are completely dischargable in a Chapter 7 bankruptcy case, so if you are continuallt incurring them, you might want to consider a consultaton with a bankruptcy attorney.