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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.

By MSN Money Partner Oct 21, 2013 2:19PM

This post comes from Brandon Ballenger at partner site Money Talks News.

Money Talks News on MSN MoneyBank of America may become the first big bank to offer a checking account that does not allow any kind of overdraft.

Checkbook © CorbisThe 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:

Oct 21, 2013 5:00PM

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,


Oct 21, 2013 5:49PM
Bank of America, one of the worst run corporations in America.....
I always thought it was shady that they'd allow overdrafts to start with. I'd rather deal with a decline but that doesn't make them money.
I'd rather do an overdraft fee than a short term loan from one of those high-interest rate know... sometimes things least in my life. I hope not in yours.
Oct 21, 2013 5:26PM
I'd bet if they do offer these accounts they'll charge a higher fee or charge for the number of times you use an ATM. They always have some way to ding you. I've never over drawn an account because I keep a fairly high balance to keep my checking free but would see why someone would be annoyed at a $36 charge for a 50c overdraft.
Oct 21, 2013 6:45PM
You should try out Wells Fargo's policy - They will charge you for an overdraft if you have an item sitting in your 'pending transaction' that WOULD have overdrawn your account, IF it had gone through, even though it actually didn't and is still sitting in your 'pending transactions' waiting to be processed! (ie "credit card" transactions like when you buy gas at the pump..).  Have them justify that one to you!!!
Oct 21, 2013 5:32PM
Another trick I'm sure of it.... I remember years ago this Slimball Bank charging me 320.00 for making too many deposits in a 3 month period..
Oct 21, 2013 5:28PM

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 !

Oct 21, 2013 5:37PM
If you have money is savings then the bank could always transfer so you don't overdraw and won't get an overdraft fee.  It's not rocket science, if there is no money, don't give them what they don't have.
Oct 21, 2013 6:38PM
The bank are mopping up on these fee,they can ran a check through three times when they know there are no fund in the account.Yes ,it our mistake but why run it three times.Just another rip off.  But they want you to direct deposit your funds, want you to go on the internet, so they save money on sending out your statement .They would never have done this in the past,and we bailed a lot of these banks,so this is another way to put to us.Best advise pay by Debit card,if you send a check keep a close look since some don't cash a check for three to four weeks.So stay awake,there out to get us. BYE BYE
Oct 21, 2013 6:42PM

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!

Oct 21, 2013 6:56PM
Phock Bank of America.  Would love to see them go down.
Oct 21, 2013 5:11PM
@lockett45 - If only it were that simple. As you stated, in this "age of technology" it is pretty difficult to manage day to day finances without a bank account.
Oct 21, 2013 7:28PM
Overdraft fees is a huge revenue source for banks.  They actually like customers who overdraft now and then and pay the fees as long as they always cover the OD.  However, they now like the people who keep a lot of money in their checking and let the banks use it without paying any interest more. That didn't use to be the case.  Rich people were much more smart with their money when there was interest to be gained.  Now that there isn't, the banks are playing games.  An account with No OD has no advantages for the consumer unless it pays high interest.  Don't get sucked in.  They want your money without paying you anything, and they want no risk whatsoever.  Why would you let them have all the marbles and get nothing?
Oct 22, 2013 8:38AM

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.

Oct 21, 2013 5:47PM
Just seems like having an overdraft credit line is the answer.   You set up a loan program before you need it and when something happens that your account comes up short, the bank makes a deposit for you from your loan line.  I think mine cost me 16% interest rate but I only use the money for a week or 2.
Oct 22, 2013 7:33AM
Try the credit union, you will like it.
Oct 22, 2013 2:13AM
If the bank returns the transaction unpaid, then the customer faces the vendor fee, and possible CheckSystems referral.  If you don't have a cushion in your account, be careful about scheduling automated drafts from your account to pay bills, especially if you write checks.  Due to overdrafts, we have finally gone to a cash only policy, yet still not enough money.  At least no more NSF fees.
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