There is good news for Bank of America debit card users. Those hefty overdraft fees will soon be a thing of the past. The decision comes on the heels of federal legislation to help get consumers out of debt.
How much money do you have right now? Many people will look up their account info online to find the answer, but your online checking statement isn't always accurate due to transactions that haven't cleared. This often leaves some with a false impression they have money to spend.
You don't have to tell that to Quentin Thomas twice. Overspending has put him into overdraft.
"At least once a month,” Thomas admits.
It comes with a price.
"$34 to $35," Thomas said with disgust.
Bank of America says not anymore. It's wiping out overdraft fees for debit card purchases.
"I think that's a great idea. I might have to go back to Bank of America now. I was with them but I had to leave because of the overdraft fees," Thomas said.
"That's originally the way debit cards were set up and then they did away with it,” said Linda Tucker with the Consumer Credit Counseling Service.
Tucker encourages Bank of America customers not to get carried away with the changes to take affect this summer. Getting to the point where you're near overdraft is bad business she says.
"Ideally you should know what's in your checking account so you don't run into that problem,” Tucker suggests.
Soon credit card companies will offer consumers the choice of opting in to accept an overdraft fee when making a purchase that would put you over the limit.
"If you say yes, there's probably a fee attached to it. If you say no, you don't get the product," she said.
When faced with the option, Tucker says she would probably just opt out.
"You're incurring another fee," she said.
Another fee to spend money you don't really have.
"Right now I'm trying to start keeping cash on me more often," Thomas said.
Last year the banking industry racked up more than $1.7 billion from customers who allowed their accounts to go into overdraft. Though Bank of America's plan seems to be good news now, experts say chances are, banks could find more ways to add on fees to protect their bottom line.
There are some exceptions to Bank of America’s no overdraft policy. If a customer has an automatic draft made to their account to pay bills like auto insurance or a credit card for example, you could incur an overdraft fee if there isn't enough money in the account. Same thing with ATMS, if a customer tries to withdraw more money than he or she has available but in that case, the ATM would first alert the customer of the overdraft charge.
