Major retail banks see the writing on the wall when it comes to debit card overdraft fees. Even before Chris Dodd introduces his legislation going after them, Bank of America (BAC) and JPMorgan Chase (JPM) are going to change their policies, so consumers in what sounds like a consumer-friendly manner:
NYT: Chase plans to eliminate by the first quarter of next year a common industry practice that enraged many consumers. Instead of lumping a day’s worth of debit card and A.T.M. transactions together and then processing the highest amounts first — a practice that has caused large numbers of consumers to overdraw more quickly and pay more fees — it will credit the transactions chronologically. Chase also plans to allow customers to opt out of overdraft coverage.
Consumers who overdraw often do not realise that overdraft coverage is automatic and that the bank will not simply cut them off when their balance hits zero. Many banks then refuse to turn off the coverage, even when a consumer calls to request a change.
There is something ridiculous about debit card overdraft fees — you’d think it wouldn’t be that hard for the bank to just decline a transaction of the purchaser doesn’t have the money, but under the old batch system this never happens.
Bank of America says it wasn’t the threat of legislation that prompted it to change, but rather a desire to help out their customers during difficult times. Sure.