George S. May Business Blog

Banks restructure overdraft fees — Senator Chris Dodd gets his wishes sooner than expected

It’s unbelievable what can get done when a bit of Congressional pressure is applied.

“Wells Fargo & Co., parent company of Wachovia Corp., has amended its overdraft practices.

The San Francisco-based bank is eliminating fees for customers when they overdraw their accounts by $5 or less and will charge no more than four overdraft fees per day.

In addition, Wells Fargo and Charlotte, N.C.-based Wachovia customers will be able to opt out of overdraft coverage, meaning customers can specify that they don’t want their transactions authorized into overdraft if funds aren’t available to cover the transaction.

“We want to deliver the best banking experience we can and believe these changes, in addition to the tools we already provide, will help our customers minimize overdraft fees,” says Carrie Tolstedt, senior executive vice president and head of community banking. “Most of our customers don’t need overdraft coverage in any given month, but for those that do we hope these changes, along with the tools we already provide, will help them minimize overdraft fees.”

Wells Fargo (NYSE:WFC) says more information will be made available to customers over the coming months.

Charlotte, N.C.-based Bank of America Corp. also is changing its checking-account options, saying the move will help customers avoid excessive overdraft fees.

Effective Oct. 19, the bank won’t charge fees when a customer’s account is overdrawn by less than $10 for one day. In addition, BofA won’t charge fees on more than four items per day.

And in June, Bank of America (NYSE: BAC) will introduce an annual limit on the number of times customers can overdraw their accounts when they lack sufficient funds to cover their transactions. BofA also will limit overdraft capability and provide new customers the choice to opt into the overdraft program when opening an account.” (source)

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