An ATM machine in a Bank of America office is pictured in Burbank.
NEW YORK - Bank of America said on Wednesday that overdraft fee revenue for June and July was down 90% from last year, due to lowering the fees charged to customers with account balances that go negative.
The second-largest U.S. bank was one of several banks to have reduced or eliminated overdraft fees over the past year, after the U.S. Consumer Financial Protection Bureau CFPB put spotlight on the charges, saying banks made more than $19 billion from them in 2019.
Since December, Capital One Financial Corp has said it will stop charging overdraft fees entirely, while the largest U.S. bank, JPMorgan Chase Co, said it would give customers more time to bring their accounts back above $0 before charging them fees.
In May, Bank of America cut overdraft fees to $10 from $35. It eliminated the $35 non-sufficient funds NSF fee customers pay if a check or automatic payment causes their account balances to go negative, and it eliminated the $12 fee charged when customers use overdraft protection services.
Since the changes were implemented, the bank says overdraft fees contributed just 0.4% of its total second-quarter revenue, compared to 1% of all bank revenue in 2021 before the new policies were put in place.
The figure on its lost revenue was not published by the Charlotte, North Carolina-based lender. It reported total revenue of $22.7 billion in the second quarter of this year and $89.1 billion for the full year of 2021.
Holly O'Neill, Bank of America's president of retail banking, said regulators responded positively to the new policies. They've been very supportive of the direction we're heading, O'Neill said.
She said that while the bank will continue to monitor consumer behavior, it doesn't feel pressured by regulators to make more changes.
The fees serve as an incentive for customers to not overspend, according to O'Neill, a bank of America that has not completely eliminated overdraft fees.
There are very good reasons not to eliminate the fee entirely, O'Neill said. You want to encourage clients to spend money they already have in their account rather than money they don't have.