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Banks Loosen Overdraft Policies

Posted by: RateAPY Bank Rates News
September 25th, 2009

As Congress considers legislation to protect consumers from bank fees, two of the nation’s biggest banks are backing off from their most punitive overdraft policies. The Wall Street Journal reports Bank of America announced it would no longer charge customers overdraft fees for overdrawing their accounts by less than $10 in a day, and J.P. Morgan Chase & Co. made a similar pledge for customers who overdraw by $5 or less in one day.

You might assume you can’t overdraw your checking account with your ATM card, but if your bank is like most, you’re probably enrolled in an automatic overdraft program, in which the bank covers the overdraw and charges you a fee. The practice has brought in revenue for banks, but come under growing scrutiny from consumer advocates and lawmakers.

Of course a sure way to protect yourself from fees is to keep close track of your account balance and link your money market or savings account to your checking account for overdraft protection.