Truist Joins Banking’s Movement Away from Overdraft Fees
Truist Bank will gradually move away from accounts that charge fees for overdrafts or non-sufficient funds, reports American Banker.
The launch of Truist One Banking — which is expected to take place this summer — is a major part of the Charlotte, North Carolina, company’s plan to overhaul its checking account program and expand access to mainstream financial services. The plan also includes the elimination of fees for non-sufficient funds, negative account balances and overdraft protection transfers. Older accounts that charge overdraft fees will gradually become a smaller part of the company’s deposit base.
Other major banks have announced similar plans, including Wells Fargo and Bank of America.
According to American Banker, the move will result in a decrease in overdraft fee-related revenue of $300 million per year.
Banks are moving away from the unpopular fees as regulators such as the Consumer Financial Protection Bureau (CFPB) are indicating a crackdown on the practice.
“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” said CFPB Director Rohit Chopra. “We will be taking action to restore meaningful competition to this market.”
Even as the industry moves away from these fees, groups like the National Consumer Law Center (NCLC) continue to highlight the harms they cause.
“Overdraft and NSF fees are one of the leading reasons that people are unbanked, either because past overdrafts put the consumer on an account screening list that prevents them from opening new accounts, or because the fees make it too costly to maintain an account,” said Chi Chi Wu, staff attorney at the National Consumer Law Center.
Want more consumer news? Check out my newsletter!