Wisconsin’s Associated Bank is the latest large bank to eliminate non-sufficient funds fees and overdraft protection fees.
In announcing that the change will take effect early in the third quarter of this year, the $35 billion bank also committed to eliminating its continuous overdraft fee and reducing the daily limit of overdraft purchases from four to two. The changes are expected to reduce customer overdraft fee expenses by approximately 30 percent.
“These overdraft changes are in response to listening to our customers and their immediate needs in this ever-changing environment,” said Andy Harmening, president and CEO of the Green Bay, Wis.-based bank.
Associated’s announcement came less than two months after Citigroup announced it was eliminating its overdraft program. Bank of America no longer charges such fees and instead declines transactions when accounts could be overdrafted. Huntington Bank has a 24-hour grace period, and PNC’s Low Cash Mode offers no non-sufficient funds fees and a maximum of one $36 overdraft item fee per day.
These changes come as political pressure mounts on the industry to change its overdraft practices. In December, Acting Comptroller of the Currency Michael Hsu said new rules and credible enforcement threats were needed to bring overdraft reforms. To Hsu, banks should tailor their overdraft programs — potentially allowing for a 48-hour grace period, or having a maximum overdraft amount — based on the needs of their customers
U.S. Sens. Cory Booker (D-N.J.) and Elizabeth Warren (D-Mass.) reintroduced legislation last August that would ban overdraft fees on debit card transactions and ATM withdrawals, and limit fees placed for checks and recurring payments. Still, according to a Morning Consult study, a majority of consumers would oppose rather than support a government proposal to prevent banks from offering overdraft protection (54 percent to 26 percent, respectively).