Bank of America Consumer Overdraft Fees Drop 90% in June and July Following Industry Leading Changes

Rhea-AI Summary

Bank of America has reported a 90% decline in overdraft service fees for its consumer checking accounts in June and July, following significant changes to its overdraft policies. Key measures include eliminating non-sufficient funds fees and reducing overdraft fees from $35 to $10. Approximately 45% of new checking accounts are now SafeBalance accounts, which impose no overdraft fees. The bank aims to reduce consumer overdraft fees by 97% from 2009 levels by next year. Despite these changes, client overdraft fees accounted for less than 0.4% of total revenue in Q2 2022.

Positive

• 90% decline in overdraft fees, enhancing customer satisfaction.
• Elimination of non-sufficient funds fees improves transparency.
• Reduction of overdraft fees from $35 to $10.

Negative

• None.

Year-Over-Year Decline Fueled by Continued Enhancements to Overdraft Program, Including No-Overdraft Fee SafeBalance® Account and the Elimination of Non-Sufficient Funds Fees

CHARLOTTE, N.C., Aug. 17, 2022 /PRNewswire/ -- Bank of America today announced that in June and July fees related to overdraft services for its more than 35 million Consumer checking accounts declined 90% compared to the same period in the prior year. June and July were the first two months after sweeping changes related to these services were implemented.

Earlier this year, the bank announced industry leading changes that included the elimination of non-sufficient funds (NSF) fees and the reduction of overdraft fees from $35 to $10. Clients can also avoid overdraft fees altogether by choosing a SafeBalance checking account, which now represents approximately 45% of new checking account openings. Consumer client overdraft fees made up less than 0.4% of the company's total revenue in the second quarter of 2022.

"For more than a decade, Bank of America has invested heavily in supporting our clients' financial health through industry-leading solutions and ongoing enhancements to our overdraft services," said Holly O'Neill, President of Retail Banking, Bank of America. "Our scale, client focus and technology investments have allowed us to adopt policies and innovate in ways that help clients manage their everyday finances and liquidity needs on their own terms, while also delivering for our shareholders."

By next year, new solutions and enhanced programs introduced over the last decade will reduce consumer overdraft fees by 97% from 2009 levels.  

Progress toward reducing overdraft fees

Since 2010, Bank of America has taken many steps to empower its consumer clients to bank with greater confidence and reduce overdraft usage. The company leads the industry in helping clients avoid overdrafts and, in doing so, has significantly reduced the vast majority of fees related to overdraft. Key milestones along this journey have included:

• 2010 – Eliminated overdraft fees for consumer clients when using debit cards at the point of sale
• 2011 – Introduced courtesy low balance alerts
• 2014 – Launched the SafeBalance "no overdraft fee" account
• 2017 – Eliminated the extended overdrawn balance charge
• 2020 – Created Balance Assist, a low-cost solution to manage short-term liquidity needs
• 2021 – Launched Balance Connect , our enhanced overdraft protection service, which lets clients link to up to five accounts to avoid overdrafts
• Feb 2022 – Eliminated non-sufficient funds fees on consumer deposit accounts
• Feb 2022 – Removed ability for clients to overdraw their accounts at the ATM
• May 2022 – Reduced consumer overdraft fees from $35 to $10
• May 2022 – Eliminated Balance Connect for overdraft protection transfer fee (formerly $12)

Essential Solutions

In addition to the changes to overdraft related fees, Bank of America's suite of Essential Solutions offers a powerful combination of transparent, low and no cost, easy-to-use offerings that help clients budget, save, spend and borrow carefully and confidently. The full array of solutions includes:

• SafeBalance® – With SafeBalance, there are no overdraft fees, and the monthly maintenance fee is waived for eligible students under the age of 25 as well as for clients enrolled in our Preferred Rewards program with qualifying balances.
• Balance Assist – Balance Assist provides an affordable way for clients to manage their short-term liquidity needs, borrowing only the amount they need, up to $500 (in increments of $100) for a $5 flat fee regardless of the amount borrowed. Repayments are made in three equal monthly installments over a 90-day period. To learn more, review these additional product details and eligibility criteria. Borrowers must have been a Bank of America checking account client for at least one year. More than 400,000 Balance Assist loans have been completed since the start of the program.
• Balance Connect – Balance Connect allows our clients overdraft protection through the ability to link up to five accounts to their checking, while increasing simplicity and accessibility through digital sign-up and management.
• Secured Credit Cards – The Customized Cash Rewards, Unlimited Cash Rewards and BankAmericard® Secured Cards can help clients establish, strengthen or rebuild credit, and they can apply for an account with a security deposit starting as low as $200. With responsible credit behavior, over time, this could help clients improve their credit score.
• Affordable Home Loans – In early 2019, Bank of America launched its now expanded $15 billion Community Homeownership Commitment, which has already helped 36,000 low- and moderate-income homebuyers achieve homeownership through low down payment loans and down payment and closing cost grants. By 2025, Bank of America anticipates helping more than 60,000 individuals and families to purchase homes through the program.
• Keep the Change® – This tool helps clients build savings by automatically depositing spare change from rounded up debit card transactions into a savings account. Over the last 15 years, this program has helped clients direct more than $15 billion in excess change to client savings.
• Better Money Habits® – A free financial education platform that provides a simple, accessible way to connect people to the tools, resources and education they need to take control of their finances.

Recognized Leadership 

Last year, Bank of America was recognized with more than 280 industry awards for its innovation, financial technology, and delivering exceptional client services and solutions.

Forward-Looking Statements

Certain statements contained in this news release may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the current expectations, plans or forecasts of Bank of America based on available information. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These statements often use words like "expects," "anticipates," "believes," "estimates," "targets," "intends," "plans," "predict," "goal" and other similar expressions or future or conditional verbs such as "will," "may," "might," "should," "would" and "could." Forward-looking statements speak only as of the date they are made, and Bank of America undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

Forward-looking statements represent Bank of America's current expectations, plans or forecasts of its future results, revenues, expenses, efficiency ratio, capital measures, and future business and economic conditions more generally, and other future matters. These statements are not guarantees of its future results or performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict and are often beyond Bank of America's control. Actual outcomes and results may differ materially from those expressed in, or implied by, any forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks discussed under Item 1A. "Risk Factors" of Bank of America's Annual Report on Form 10-K for the year ended December 31, 2020, and in any of Bank of America's other subsequent Securities and Exchange Commission filings.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 4,000 retail financial centers, approximately 16,000 ATMs and award-winning digital banking with approximately 55 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

For more Bank of America news, including dividend announcements and other important information, register for email news alerts.

Reporters May Contact:
Don Vecchiarello, Bank of America
Phone: 1.980.387.4899
don.vecchiarello@bofa.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/bank-of-america-consumer-overdraft-fees-drop-90-in-june-and-july-following-industry-leading-changes-301607843.html

SOURCE Bank of America Corporation

FAQ

What changes did Bank of America make to its overdraft fees in 2022?

In 2022, Bank of America eliminated non-sufficient funds fees and reduced overdraft fees from $35 to $10.

How much did consumer overdraft fees drop in June and July 2022?

Consumer overdraft fees at Bank of America dropped 90% in June and July 2022 compared to the same period the previous year.

What percentage of new checking accounts are SafeBalance accounts?

Approximately 45% of new checking accounts opened at Bank of America are SafeBalance accounts.

What is the projected reduction in consumer overdraft fees by next year for Bank of America?

Bank of America aims to reduce consumer overdraft fees by 97% from 2009 levels by next year.

What did Bank of America's overdraft fees account for in Q2 2022?

In Q2 2022, client overdraft fees contributed less than 0.4% of Bank of America's total revenue.