Bank of America, JPMorgan and BB&T a week later have announced significant changes to their overdraft fees policy.

     In what appears to be a proactive move by banks to attempt to regain the confidence of consumers several banks are making major changes to their overdraft policies. Though I agree these changes are good I still feel that their should be some sort of consumer protection law that will prevent banks from possibly going back to their racketeering grade practices when things improve.

      Bank of America Corp. announced on the 22nd that it will cap overdraft fees starting October 19th, Bank of America will no longer will charge overdraft fees when a customer’s account is overdrawn by less than $10 in one day. Remember getting hit with a $35 fee because they let you go over by ten cents. The irony is the consider this a benefit to the consumer. I think that is right up there with benefits such as stubbing my toe real hard or slamming my head in to a wall repeatedly. Bank of America will still charge the fee however if the account is not  within five days. Another change in their policy is limiting the number of times the $35 fee can be charged to an account to four times in one day.This a reversal of a previous increase in the cap from 5 to 10. They had also increased the overdraft fee from $25 go $35, an increase that will remain. Currently new customers are automatically paired with overdraft protection with opting out only allowed in “special circumstances.” The new policy will allow people to opt out at anytime causing transactions to be denied at the register if there are insufficient funds. Please note you will have to go to your local branch to opt out as a phone number has yet to be released for this service.  An AP article spoke with a BOA spokesperson who answered this when asked about the more damaging policy changes made earlier to which she responded, “the company is responding to the “changing needs” of customers in the difficult economic environment.” As a consumer I would be concerned that my bank thinks that when times are bad gauge the depositor who pays their bonuses with more fees and gotchyas.

     JPMorgan Chase & Co. and BB&T are making changes to their overdraft fees policy as well. JPMorgan is not giving a specific date but beginning first quarter of 2010, the bank will make overdraft protection opt-in for all customers, post transactions to accounts as they occur, and eliminate fees when accounts are overdrawn by $5 or less. They also going to cap the amount of times a fee can be applied per day to three from six. These terms are much more pro-consumer and further reinforce my distaste over how BoAconducts business with consumers.

BB&T will be modifying its overdraft policy as well eliminating fees if a transaction exceeds the account balance by less than $5. They will also limit the amount of times an account can be charged to 4 times and will also make changes to alert ATM customers if a withdrawal will overdraw their account.

     Most banks automatically enroll consumers in so called “overdraft protection.” Consumer advocates as well as myself believe these  overdraft programs are misleading. Overdraft fees become an industry standard in the past several years, and a hefty source of revenue for banks.

Matt