Rohit Chopra, director of the Consumer Financial Protection Bureau, has said, "Banks need to kick the addiction" to overdraft fees. File Photo by Kevin Dietsch/UPI | License Photo
Jan. 11 (UPI) -- Bank of America announced Tuesday it is eliminating fees for insufficient funds and reducing overdraft fees from $35 to $10.
In a news release, the bank described the moves as the latest in a series of changes over the past decade to its overdraft services. The insufficient funds fee will be eliminated in February and overdraft fees will be reduced in May.
"We remain committed to taking actions that will further bring down overdraft fees in the future and continue to empower clients to drive positive changes to behavior pertaining to overdraft," said Holly O'Neill, president of retail banking.
The company said that, with the new changes, it will have reduced overdraft fee revenues by 97 percent since 2009.
Bank of America follows changes at other big banks after the release of a report in December from the Consumer Financial Protection Bureau that calculated banks charged U.S. customers $15.47 billion in overdraft and non-sufficient funds fees in 2019, the most recent data available.
CFPB director Rohit Chopra said then "banks need to kick the addiction" to overdraft fees.
"Rather than earning interest, many American families end up paying large banks for the privilege of holding their money," he said. "The main way banks have flipped the script from paying depositors to charging them is through deposit account service charges like overdraft fees."
Ahead of that report, Capitol One announced that it would eliminate all overdraft and insufficient fund fees, giving up $150 million in revenue. Chase Bank soon followed, saying said it would retain its $34 overdraft fee, eliminate its non-sufficient funds fee and help customers avoid its overdraft fees.
In May, Sen. Elizabeth Warren, D-Mass., had a testy exchange with JPMorgan Chase CEO Jamie Dimon about the issue at a Senate Banking Committee hearing.
At the hearing, Dimon said he would not refund $1.46 billion in overdraft fees to customers as COVID-19 raged during 2020 as Warren requested.