MINNEAPOLIS (AP) — U.S. Bank on Thursday became the latest financial institution to back off on the penalties customers face for overdrafting their accounts.
The bank’s Minneapolis-based parent, U.S. Bancorp, said it will change checking account overdraft policies effective in the first quarter of next year. Several other major U.S. banks have made similar announcements this week, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co.
U.S. Bank will eliminate overdraft fees when a customer’s account is overdrawn by less than $10, regardless of the number of overdrafts that may have occurred. And the bank will limit the number of overdraft fees charged to no more than three per day, and set an annual cap on the amount of overdraft fees that can be charged on any single account.
U.S. Bank also said it will soon allow customers to “opt out” of overdraft protection. Transactions would be declined by the bank if the customer lacks sufficient funds. New customers will be allowed to direct the bank how they wish to have transactions handled when they lack funds.
The announcement came after shares of U.S. Bancorp closed down 17 cents at $21.90.
The banking industry’s move toward easing overdraft policies follows widespread criticism by lawmakers and consumer groups, which have argued that the fees are excessive. The industry practice of automatically enrolling customers into overdraft protection also has been lambasted as misleading those customers who think they are only able to spend what is in their account and are unaware that they’ve triggered an overdraft. Credit card reforms passed earlier this year will soon limit banks’ ability to raise fees and interest rates and require greater disclosure about costs.
© 2009 The Associated Press. All rights reserved.
