Bank of America May Offer a No-Overdraft Checking Account

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The bank is considering a plan to offer a new checking account that won't allow overdrafts of any kind. It would be optional for bank customers.

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.

Stacy Johnson

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