Weekly Roundup – BOA To End Overdraft Fees On Debit Transactions

Bank of America recently announced they plan to stop charging customers overdraft fees for exceeding their checking account balance with debit cards. They go on to say they will no longer allow charges to go through if the amount exceeds the available funds in customers’ checking accounts. I say, it’s about time!

I’ve never liked the idea of a bank allowing a charge to go through for more than is available, and then tacking on a $30+ fee for the privilege. I’d much rather know at the checkout that I don’t have the $6.87 for a fast food meal, rather than discovering it cost me another $35 when I get my statement.

I hope credit cards will follow the lead, because overdraft fees are another ridiculous bank fee. Sure, the onus is really on cardholders to keep up with their available credit, but a $35 fee for going a few dollars over doesn’t add up – the punishment doesn’t fit the crime.

The Frugal Roundup

Lessons in Frugality From a Lady Named Grace. Here is a great story about a woman who lived below her means and gave away about $7 million on a secretary’s salary. (@The Money Jar)

How to Make Money On Facebook. Next time, don’t rave about a house you want to buy until you close the deal. (@brip blap)

10 Benefits of Raised Garden Beds. I’ve talked about square foot gardening before and Lynnae gives some great tips on the benefits. (@Being Frugal)

Best of the Rest

Wrap Up

I’d like to invite those of you who visit the site directly to sign up to receive our content for free delivered via email or feed reader. It’s simple to set up and only takes a second. Did I mention it was free? Thanks to those who have already subscribed!

Don’t forget to spring forward an hour Saturday night/Sunday morning. I use the occasion as an opportunity to test our home smoke alarm and carbon monoxide detector, something that should be done at least a couple times a year.


  1. I heard the announcement about Bank of America taking the lead concerning overdraft fees on the debit card. I always thought that a debit card was designed to be processed immediately providing the funds were available and that if they were unavailable, it would automatically be declined. Therefore, I never focused on being overdrawn. Instead my focus became keeping my check book balanced so that if I made a purchase I knew the funds were available since I didn’t want to risk being embarrassed because of a declined transaction. I also operated on the same principle once Check 21 came on the scene. No funds, no check writing. Giving $35 away because a check or debit doesn’t clear is like taking your money and putting it in a barrel and burning it. Not practical or smart at all.

  2. This is nice on the surface, but I have a feeling that this fee will crop up elsewhere in another form. Banks are businesses that are out to make as much money as possible. Will they willingly give up such an easy, lucrative profit opportunity? To answer such a question, I have to ask myself what I would do if I had such a business. The answer would be “No”. Anyone who has been to a large city has seen the towering granite mega-bank buildings. They gotta heat and cool those places with revenue from somewhere. So keep an eye on all of your accounts and notices. My bet is that $35 overdraft fee is going to show up somewhere else. Maybe an ‘account overactivity fee’ for too many transactions…(grins).

    Another good way to ensure you are never overdrawn is to work on a zero base budget; that way you can’t overdrawn because you never spend more than you have. I’ve been doing this for 2 years and haven’t ever worried about it. I also keep a $500 minimum balance in case my math is bad in the checkbook ledger or if I go several days before enter the transactions into Quicken.

  3. We also pad our checking accounts with $1000 for unforeseen circumstances. That saved us a couple of months ago when our WAMU mortgage switched to Chase and was auto-debited TWICE. My checking account was at $100 and I was not a happy customer.

    It got worked out in three weeks…but I’m still thinking about moving on from Chase. I’ve never had any problems with my ING Direct checking…

    I’m glad BOA isn’t overdrafting for debit cards anymore…I always thought that was silly. We’ve never had overdraft fees (we use credit cards and pay off the balances every month), but most of my friends were hassled by them a few times.

  4. Hopefully other card companies will follow suit. Most people nowadays have more than one card. If their debt/check card fails, switch to a new card. I think that’s better than ending up with a $30 overdraft fee. Especially if you don’t check your bank account for a few days and go on spending.

  5. Of course the overdraft fee was silly, but it was also completely avoidable with a little bit of diligence. I was okay with less diligent people providing me with a free checking account. Now as Bank of America looks for other fees to make up for the lost revenue, I might have to look for another bank. And moving accounts is always a hassle. Let’s file this under “be careful what you wish for…”

  6. @Sid and Another Scott: You both make a good point about the unintended consequences of this move. Or perhaps a better description is the undesirable consequences, from a consumer point of view.

    In fact, the entire CARD Act that recent came to pass will have unintended/undesirable consquences as banks and credit card issuers look for new ways to produce revenue. After all, you didn’t think they were just going to make less money, did you?!

  7. What bugs me about all this is the attention that BOA (one of the least consumer-friendly banks in the country, if one believes all the complaints) is the attention, as if they were doing something virtuous.

    They should never have allowed overdrafts on debit cards to begin with. A debit card is not a credit card.

    You can be certain that they are indeed doing lots of other stuff to ensure that they make money.

    All of these banks acting like they are really trying to help consumers. What a croc.

    They almost all raised rates, on even their best customers, before the new changes went into affect. Not to mention many instituted new fees.

  8. I have BOA and they are a great bank. They’re always a pioneer for change.

    I’m sure other big banks will follow suit before risking to lose customers.

  9. This is just another BOA “aren’t we wonderful” moment. They are only doing this because their software does not allow them to meet the compliance needed for the CARD act changes. Believe me, if they could have waited and corrected thier software at less cost, that’s what would have happened.

    Having worked for a long time in this industry on the software side, I know this is not BOA being a “great bank”.

  10. I think that any bank, provided the customer signs up for it, should be able to offer overdraft. If I was a BoA shareholder, I’d be angry that they are just abandoning such a good money maker.

    I just wrote a post about it, I invite your readers to check it out.

  11. I agree with you. If I don’t have the money in my checking account and try to make a charge with my debit card, just decline the transaction instead of accepting it and charging me a $39 overdraft fee. It’s amazing how much money banks make on fees, like late fees, overdraft fees and over-limit fees.