A recent proposal by the Federal Reserve Board would prevent lenders from automatically issuing overdraft fees when consumers surpass their debit limits.
One commercial bank is echoing this effort by eliminating overdraft fees on debit accounts this summer. According to a recent announcement, Bank of America customers will only be able to make transactions if they have enough money in their account. The company currently charges $35 for those who overextend their debit cards.
The bank’s Overdraft Protection plan will allow consumers to use another form of payment or funds from their savings or other accounts to cover purchases. Consumers will also be warned at ATMs if withdrawing a certain amount of cash would overdraft their account. Customers will receive an online warning if they have a low balance or are at risk of overdrafting.
“Our solution is simple, clear and helps customers control their finances by reducing the possibility of overextending themselves at the point of sale with a debit card,” said Susan Faulkner, a Deposits and Card Product executive at Bank of America.
Debit users will receive similar protection from the Fed starting July 1. Recent rules would prohibit financial institutions from charging customers who overextend their accounts through a purchase or ATM withdrawal unless they consent to such fees.
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