Bank of America customers who are sick of fees may breathe a sigh of relief in 2022. The bank says it will eliminate non-sufficient funds fees in February and lower its overdraft fees from $35 to $10 in May.
Overdraft fees kick in when your account’s balance isn’t large enough to complete a transaction, but the bank covers the bill. Starting in May 2022, Bank of America customers who incur this fee will be charged $10 instead of $35.
At Bank of America, non-sufficient funds (NSF) fees are traditionally charged when a transaction exceeds your available balance. The bank refuses the transaction, but still charges you a fee for not having enough funds available to complete it. This fee will be eliminated in February. That month, Bank of America will prevent customers from overdrawing their accounts at ATMs too.
Bank of America will also eliminate a transfer fee related to overdrafts. A service called "Balance Connect," available with most Bank of America checking accounts, is designed to help customers avoid overdraft fees by linking up to five other Bank of America accounts. When you don't have a large enough balance to complete a transaction, the bank transfers money from a linked account to cover the difference.
Normally, that transfer fee is $12, but it's being eliminated in May. However, the bank may still charge an overdraft fee if there aren't enough funds in your linked accounts to cover the transaction.
More banks eliminate overdraft fees
Bank of America is joining other large banks like Capital One, Ally Bank and Discover in taking moves to reduce or eliminate overdraft fees and other fees charged when customers don’t have available balances large enough to cover transactions.
The average overdraft fee is still about $35 across most large banks. So, if you’re covered by overdraft protection and you purchase a $5 coffee with a $0 available balance, you’ll have your coffee. But when the overdraft fee is added on, it means that $5 coffee actually sets you back by $40.
Many of the institutions on Money's "Best Banks" list have been getting rid of these fees, which have long been seen as a way to prey on low-income customers.