Truist Cuts Overdraft Fees and Joins Other Big Banks | Economic news

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By KEN SWEET, AP Business Writer

NEW YORK (AP) — Truist Bank announced on Tuesday that it is reducing its overdraft fees, becoming the latest major bank to announce an overhaul of overdraft policies that often affect the most vulnerable customers.

The bank plans to roll out a new checking account this summer that will have a $100 buffer for customers who spend more than they have in their accounts. It will also create a line of credit for those who need to go deeper into negative territory. There will be no individual overdraft fees charged to the account.

The Charlotte, North Carolina-based bank also plans to create a second bank account product aimed primarily at unbanked or low-income people that won’t allow customers to overdraw their accounts.

The bank is also getting rid of the insufficient funds fee – more commonly known as an NSF check fee – as well as the savings transfer fee, which is charged when a bank transfers funds from a long-term savings account. to a customer’s current account to cover a potentially negative balance.

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Truist expects the changes will allow customers to pay $300 million less in fees per year by 2024

“We realized there was a population that we weren’t serving well,” said Brant Standridge, director of retail community banking for Truist Financial Corp., in an interview. “We believe these changes achieve what our customers are asking for.”

Truist, the nation’s sixth-largest bank and a dominant banking force in the South, joins a growing number of banks that have eliminated overdraft fees entirely or created new products to prevent customers from racking up too many one-time fees.

They include Bank of America, which cut its overdraft fee to $10 from $35 last week, and Wells Fargo, which announced plans to give customers quick access to direct deposits to avoid overdraft fees, among other changes. Capital One reduced overdraft fees to zero in December and Ally Bank eliminated overdraft early last year.

For years, the banking industry has relied heavily on overdraft fees to boost its profits. The Consumer Financial Protection Bureau found the industry charged $15.5 billion in overdraft fees in 2019, with three banks — JPMorgan Chase, Wells Fargo and Bank of America — accounting for 44% of that revenue. These banks have since announced changes to their fee policies.

Truist executives said the changes had been in the works for some time and were unaffected by announcements from rivals Wells Fargo and BofA. Industry analysts said they expect more banks to announce fee reductions this year due to the competitive influence of big banks in the industry.

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