Having to pay a $35 bank fee for being overdrawn by a small amount, say $10 or less, has always seemed outrageous. Now, with the recession squeezing consumers' wallets, the outcry over abusive bank practices has finally reached Washington and lawmakers are threatening to restrict overdraft fees by law. It's about time.
Perhaps with a view toward heading off legislation, at least three banks have responded by voluntarily lowering or eliminating these unfair charges and instituting other consumer-friendly policies. Good, but not good enough.
The first to act were Bank of America and JPMorgan Chase, which announced last week that they would alter policies involving excessive fees. Beginning Oct. 19, Bank of America will stop charging any fees for customers who overdraw their accounts by less than $10 in a single day. It will also limit the number of overdraft fees to four a day, though the overdraft fee will remain $35.
Chase will cap the number of overdraft fees at three per day and stop imposing this penalty when accounts are overdrawn by less than $5. More important, it promises to end an unfair practice that times the processing of transactions to produce maximum overdrafts -- processing the highest amount first, instead of chronologically.
Both banks will also make it easier for customers to opt out of overdraft protection, and Bank of America says it will warn customers before they hit their limit. That's a step bank customers have been demanding for years.
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