B of A may offer a no-overdraft checking account
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.
This post comes from Brandon Ballenger at partner site Money Talks News.
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.
B of A 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.
More on Money Talks News:
Isn't the bank supposed to decline transactions which overdraft an account??? Oh wait, they let it happen so they can collect $34.00 in OD fees. The new American way,
Sounds like a good program for our government.
We increased the spending limit, and the next day Obama gives some of the borrowed money away to Pakistan !
Congress needs a no overdraft policy.
I LOVE it ! When I clicked on Check Spelling it read "Spell check detected 1 mistake(s). It highlighted Obama !
We are living in a day and time when changes are going on everywhere. It seems every time we turn around people are wanting money or groceries increase along with utilities...etc.. it is hitting the ones that are poor and the middle class. This is world wide... all over different countries. We never know what to expect from day to day!
Why is this hard to understand ? If you don't have the money for the purchase, you can't buy it right now. And BoA had allowed these overdrafts for so long, causing the bank to jeopardize its solvency - serves them right for being so stupid. At least now they're 'wising up'.
I guess our government doesn't bank there - they couldn't handle this.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Self-serve gas stations may no longer be the easy prey of crooks with stolen credit and debit cards.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'