BofA considers new checking account that prevents overdraft - WSJ

Reuters

Oct 17 (Reuters) - Bank of America is considering aplan to introduce a checking account that curbs overdraftpractices, the Wall Street Journal said, citing people familiarwith the bank's strategy.

The bank's plan will not allow customers to overdraw theirbalances at an automated teller machine or when making anautomatic bill payment, the Journal said.

The removal of overdraft abilities would be one optioncustomers could choose under a new checking account program BofAlikely will unveil in the coming months, according to the paper.

It wasn't clear whether BofA is considering boosting fees aspart of its checking account overhaul. Bank executives haven'tmade a final decision about the overdraft policy, the newspapersaid. ()

Bank of America could not immediately be reached for commentby Reuters outside of regular U.S. business hours.

If the plan goes through, BofA would be the first big bankto prohibit overdrafts on checking accounts, the Journal said.

BofA's move builds on its decision a few years ago toprohibit customers from overdrawing their account when using adebit card to make purchases.

In 2011, under pressure from customers, the bank reversedcourse and scrapped plans to charge a $5 per-month debit fee.

Many banks let customers overdraw their accounts in exchangefor fees, typically $25 or $35. Critics say the feesdisproportionately burden lower-income customers and others whooften maintain low account balances.

A few years ago, more than two dozen U.S., Canadian andEuropean lenders were named as defendants in a class-action suitaccusing them of charging customers with excessive overdraftfees.

Bank of America paid $410 million and JPMorgan Chase paid $110 million to settle their portions of the nationwidelitigation. Those settlements won final court approval in 2011and 2012, respectively.

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