April 15, 2009

Bank of America drops back on fee changes

U.S. financial giant Bank of America Corp. said it was abandoning plans to raise overdraft fees in light of the current economic environment.

With billions of taxpayer dollars bailing them out, banks are facing a storm of criticism for raising fees on the same taxpayers who are assisting them, The Charlotte (N.C.) Observer reported Wednesday.

Bank of America spokesman Jim Pierpoint said the bank was concerned with rising unemployment and would suspension account fees for three months for customers who lost their jobs. It would also drop its previously announced plan to raise overdraft fees from $35 to $39.

Earlier this year, the bank changed the limit of five overdrafts to 10, making it possible for customers to incur twice the fees if their accounts are overdrawn. In addition, the bank added a one-time fee of $35 for accounts overdrawn for more than five days.

However, Bank of American said it would drop the overdraft fee to $10 for accounts less than $5 overdrawn, a gesture that drew a mixed response from Josh Frank, a senior researcher at the Center for Responsible Lending.

A $10 fee for a $5 overdraft is outrageous, he said, but, it's low enough people may tolerate it.