Bank of America customers will soon be unable to spend more than they have in the accounts linked to their debit cards. It's a step that may become a common move ahead of new regulations limiting overdraft fees.
Rules set by the Federal Reserve that will ban banks from charging such fees, without first getting permission from the customer, are set to take effect July 1.
But Bank of America is going a step further than the regulations require. It will simply no longer allow debit card purchases to go through if there isn't enough money in the account, The Associated Press reports.
The Federal Reserve recently announced new requirements that are slated to go into effect in July. But the Charlotte, N.C.-based lender's move goes one step further.
The Fed's new rules will prevent banks from automatically enrolling customers in overdraft protection programs, which charge fees when consumers spend more than they have in their accounts. More than 75% of banks automatically sign customers up for overdraft programs, according to a study by the Federal Deposit Insurance Corp.
With the bank's new policy, BofA (BAC, Fortune 500) debit card purchases that would push checking account balances into the red will be declined for new customers beginning in June, and for existing customers starting in early August, CNNMoney reports.
According to Credit Union Times, the bank said it was reversing its previous policy "to provide more control, choice and clarity for its customers," adding that "this change will help customers by reducing the likelihood they may inadvertently overdraw their account and thus eliminate unexpected overdraft fees on these transactions." Customers who choose to can link their accounts to an overdraft protection account which would allow them to continue to overdraft their debit cards when they need to, the bank explained.
"Our customers have been clear that they want to know if a purchase is going to overdraw their account," said Susan Faulkner, deposits and card product executive. "Our solution is simple, clear and helps customers control their finances by reducing the possibility of over-extending themselves at the point of sale with a debit card."
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