Wednesday, March 10, 2010

No More Overdraft Fees on Debit Cards

I used to be under the impression that if there wasn’t enough money in my account to cover a purchase made using a debit card, the transaction would be rejected.  In fact, I’ve had it happen quite a few years ago so I had no reason to believe it had changed.  When I moved from the Seattle area to Minnesota, I discovered that was no longer the case.  When I arrived at my destination and had a chance to check my bank balance, you can imagine my shock to discover I had not one, but THREE overdraft charges.  I was, to say the least, distraught! 

When I called the bank, they were kind enough to refund the overdraft fees but the customer service representative told me that a debit card is not different than a check and if it is used when there aren’t funds to cover the transaction, an overdraft fee will be assessed.

That is about to change—well, at least for Band of America customers.  This morning, in a story from NPR, they announced that starting July 1st they will no longer do that—they will simply deny the charge. Hurray Bank of America!  I can’t help but think there will be a significant number of people flocking to their banks to open an account.

Not only is this good customer service, it’s a great marketing. It’s going to cost them almost no revenue and gain them much good will. I was told by my banker that the fees charged just barely cover the administrative costs of handling the overdraft. Simply denying the transaction is a simple computer program update.

I’m not quite prepared to change my account from the bank I love but I sure would if I were on the fence about whether to stay with them or not. Besides, I’m certain my bank is savvy enough to follow suit in short order. Actually, I think I may just call them this morning to find out when they plan to do that--hmmm, and while I'm at it, perhaps an email to their headquarters might be in order as well.

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