Bank of America to Slash Overdraft Fees, Experts Call the Move 'Brilliant' In addition, non-sufficient funds fees will be eliminated completely.

By Amanda Breen

Bank of America announced on Tuesday that, starting in May, it will cut overdraft fees — incurred when customers use their debit cards with insufficient funds in their accounts — from $35 to $10. And non-sufficient funds (NSF) fees, which are levied in the case of a rejected transaction or bounced check, will be eliminated completely.

Consumer-advocacy groups have been calling for reduced penalties, saying overdraft policies disproportionately affect vulnerable and low-income Americans. A report released by the Consumer Financial Protection Bureau last month found that out of an estimated $15.5 billion collected in overdraft and NSF fees in 2019, fewer than 9% of consumer accounts pay 10 or more overdrafts per year, contributing close to 80% of all overdraft revenue.

"Over the last decade, we have made significant changes to our overdraft services and solutions, reducing clients' reliance on overdraft, and providing resources to help clients manage their deposit accounts and overall finances responsibly," Holly O'Neill, Bank of America's president of retail banking, said in the company's statement.

Related: Top Analyst Reports for Bank of America, PepsiCo and Wells Fargo

Bank of America isn't the only major financial institution making significant fee changes. Both JP Morgan Chase and Capital One have reduced or eliminated similar fees that often catch customers off guard. And, following Bank of America's news on Tuesday, Wells Fargo announced its own policy shift: NSFs will be eliminated by the end of the first quarter, and so will transfer fees for accounts enrolled in overdraft protection.

"This is a brilliant move by [Bank of America] CEO Brian Moynihan," Michael Moebs, economist and CEO of economic-research firm Moebs Services told MarketWatch. "Moynihan is putting Bank of America's stake in the ground and telling all depositories and fintechs that BoA is going after their checking business, especially Wells Fargo, Chase and Chime."

Moebs notes that the pandemic has caused average Americans to keep more money in their checking accounts. Per data from Moebs Services, the average checking balance was $3,698 at the close of 2019, but by the end of 2021, the average balance had climbed to $8,244.

Related: Is Bank of America (BAC) Outperforming Other Finance Stocks This Year?

Bank of America shares have risen over 48% in the last 12 months, MarketWatch reports. In the same period, the Dow Jones Industrial Average is up almost 17%, and the S&P 500 up approximately 23%.

Amanda Breen

Entrepreneur Staff

Senior Features Writer

Amanda Breen is a senior features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Living

9 Ways to Attract Good Energy Today and Every Day

Good energy can boost our feelings of well-being, dissolve feelings of anxiety and improve communication.

Business News

'I Love Doing Product Reviews': Bill Gates Stepped Down from Microsoft in 2020, But Admits He Still Spends 15% of His Time Working at the Company

In a new interview with the Wall Street Journal, Gates also said he is still close with Microsoft's CEO Satya Nadella.

Business News

Elon Musk's DOGE Is Hiring People Eager to 'Work Long Hours' to Eliminate 'Waste, Fraud and Abuse' in the Government. Here's How to Apply.

The Department of Government Efficiency is hiring U.S. citizens to help cut spending and headcounts in the federal government.

Business News

'Everyone Can Profit From It': What Is DeepSeek? China's 'Cheap' to Make AI Chatbot Climbs to the Top of Apple, Google U.S. App Stores

DeepSeek researchers claim it was developed for less than $6 million, a contrast to the $100 million it takes U.S. tech startups to create AI.

Business News

Uber's CEO Says Drivers Have About 10 Years Left Before They Will Be Replaced

Uber CEO Dara Khosrowshahi says the jobs of human drivers are safe for the next decade, but after that, another type of driver will take over.