Wells Fargo Sign New York City

Wells Fargo is Latest Big Bank to Cut Down on Fees

More banks are making big moves that will put money back in customers' pockets.

Wells Fargo is the latest major bank to say it will reduce controversial fees, announcing it will remove fees for bounced checks, otherwise known as non-sufficient funds fees, by March 30. It will also eliminate overdraft fees for customers enrolled in its overdraft protection service.

Bank of America has also announced that it is ending fees for insufficient funds starting in February. Capital One just ended its overdraft fees at the start of the year, and Ally Bank, one of the most prominent online banks, announced over the summer that it would stop charging overdraft fees.

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The decision is a costly one for the banks. Capital One says that getting rid of the fees will cost it $150 million a year, while Bank of America says its revenue from overdraft fees will have dropped 97% from 2009 levels. Banks earned an industry-wide $15 billion from the charges in 2019, according to the Consumer Financial Protection Bureau. The CFPB says it plans to crack down on banks that rely too heavily on the fees.

Banks charge overdraft fees when there aren't enough funds in a customer's account to cover an authorized payment. They have been a lightning rod for criticism because they disproportionately affect customers living paycheck to paycheck who are least able to pay them. 

Related: 20 Things You Can't Do With a Low Credit Score

Wells Fargo says it will give customers not using overdraft protection a 24-hour grace period to cover overdrafts before charging a $35 overdraft fee. Customers who receive direct deposits will also be able to access their money up to two days sooner in an effort to cut down on overdrafts, the bank says. 

Bank of America will still allow overdraft fees, which are different from insufficient funds fees in that an overdraft transaction is still allowed to go through. However, the bank will reduce the fee from $35 to $10 in May.

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