Pursuant to the overdraft reforms pressed by Congress, Regions Bank, a subsidiary of Regions Financial Corporation (RF) announced changes to its overdraft fee policies. It announced to overhaul the overdraft fees on consumers in case the account is overdrawn by less than $5 dollars.
The bank also announced that it has limited the number of overdraft fees to no more than four per day. It would also offer “opt out” ability to customers who prefer that the bank decline or return any transaction on their account, whenever possible, when they are presented against insufficient funds.
The bank would also provide customers with a number of overdraft protection options as well as account monitoring services through online, mobile, ATM and telephone banking. The changes will take effect during the first quarter of 2010.
The changes follow U.S. congressional leaders’ criticism of bank account fees and come as the bank’s digest rule changes for credit card fees. The law sharply restricts credit card issuers’ ability to raise interest rates on existing balances, to charge certain fees and to slap cardholders with penalties. Cardholders will now get a 45-day notice before their interest rate is changed.
Overdraft fees account for more than three-quarters of all fees charged by banks. Nationwide, the median cost of an overdraft fee stands at $26, up one dollar this year. At the nation’s biggest banks, the median fee is $33. US banks have recorded $38.5 billion this year from overdraft fees charged to customers whose spending has exceeded their bank balance. These fees were mostly collected from poorer customers who are struggling to make ends meet in the midst of a global economic crisis.
Similar actions has been taken by other major banks such as Bank of America Corporation (BAC) and JP Morgan Chase & Co. (JPM), Wells Fargo (WFC) and BB&T Corporation (BBT).
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