Bank of America May Offer a No-Overdraft Checking Account

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Bank of America may become the first big bank to offer a checking account that does not allow any kind of overdraft.

The bank may “introduce a checking account that wouldn’t permit customers to overdraw their balances at an automated teller machine or when making an automatic bill payment,” The Wall Street Journal says. It wouldn’t process checks from accounts with insufficient funds, either.

BofA several years ago eliminated overdrafts when a customer makes a purchase with a debit card. If you don’t have enough money in your account, your card will be rejected. But it allows other types of overdrafts to go through.

Wouldn’t this new kind of account hurt the bank’s revenue? Probably. Bank of America charges $35 per overdraft and makes big money doing it. More than one in five American consumers have tried to make transactions that could trigger overdrafts in the past year, the WSJ says.

“Bank of America collected $10.3 billion in consumer-banking fees in the first half of 2013, according to an analysis by Moebs Services,” the WSJ says. The majority of those fees were from overdrafts, although a precise figure wasn’t given. Big banks made a collective total of $32 billion on overdraft fees in 2012, the Consumer Financial Protection Bureau says.

But no-overdraft checking might not destroy that revenue source. If the bank goes ahead with the plan, customers would have to choose this kind of checking account. “Bank of America will still offer its existing checking account — which will remain unchanged,” CNNMoney says. It’s also possible the bank could raise other fees to make up for the no-overdraft option.

There’s no guarantee Bank of America will decide to offer this new checking account, but it’s an interesting shift for the bank that, the WSJ notes, wanted to charge $5 a month for having a debit card just two years ago.

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  • Al Seaver

    Why is anyone still doing business with these big pig banks ?They were a big contributing factor with the meltdown of the economy, along with the fed who just let them carry on with their crooked dealings until it was too late.

  • http://www.thevinrose.com/ James R.

    For 2 years I had a BOA account, & had nothing but trouble from them…I would not give them the time of day let alone any of my hard earned money…

    They are nothing more than a bunch of tightwads that are out to steal as much money as they can get from their customers.

  • ponce

    Yeah, these guys suck. Years ago, you got your canceled checks back every month but that was too big a cost to continue to process them. BOA said sign up for this wonderful electronic banking so we can keep your fees low and you’ll still be able to see your checks online! So what did they just do? Institute a $3.00 fee to process and image the check they show you on-line!