Overdraft fees were touted by the administration as one part of their crackdown on banks.
Bank of America Corp. and its rivals are moving away from free checking accounts as they grapple with losing millions in fee revenue from new regulations on overdrafts.
BofA is quietly testing new pricing plans on checking accounts nationwide, The Wall Street Journal reported Thursday. The newspaper said the Charlotte-based bank(NYSE:BAC), which ranks fifth in Raleigh-Durham market share, is considering tiered pricing plans that encourage customers to do more business with BofA to avoid charges, rather than imposing flat monthly fees for all.
Banks will have to secure their customers' consent before charging large overdraft fees on ATM and transactions, according to a new rule announced Thursday by the Federal Reserve.
The rule responds to complaints from consumer groups, members of Congress and other regulators that the overdraft fees are unfair because many people assume they can't spend more on a debit card than is available in their account. Instead, many banks allow the transactions to go through, then charge fees of up to $25 to $35.
For small purchases, such as a cup of coffee, the penalty can far exceed the actual cost of the transaction.
Of course, ironically enough, this was part of a populist push to take on the banks on behalf of the middle class. Totally free checking has become a staple among all the major banks for the last decade. If that goes away, that's a fee on everyone that has a checking account (though the plan is to only charge those with only a checking account and waive fees on this with multiple accounts) That would bring pain to far more of the middle class. That appears to be the end result of yet another regulation.