NEW YORK (AP) — Truist Bank said Tuesday it is reducing its overdraft fees, becoming the latest big bank to announce an overhaul of overdraft policies that often impact 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 further into negative territory. There will no individual overdraft fees charged on the account.
The bank based in Charlotte, North Carolina, also plans to create a second bank-account product aimed primarily at unbanked or low-income individuals that will not allow customers to overdraw their accounts.
The bank is also getting rid of non-sufficient fund fees — more commonly known as bounced check fees — as well as savings transfer fees, which are charged when a bank moves funds from a long-term savings account to a customer’s checking account to cover a potentially negative balance.
Truist expects the changes will result in customers paying $300 million less in fees annually by 2024
“We realized there was a population that we were not serving well,” said Brant Standridge, Truist Financial Corp.’s chief retail community banking officer, in an interview. “We believe these changes achieve what our clients have been asking for.”
Truist, the sixth largest bank in the country and a dominant banking force in the South, is joining a growing number of banks that have eliminated overdraft fees entirely or have created new products to keep customers from racking up too many one-time fees.
They include Bank of America, which cut its overdraft fees to $10 from $35 last week, and Wells Fargo, which announced plans to allow customers to access direct deposits early to avoid overdraft fees, among other changes. Capital One cut overdraft fees to zero in December, and Ally Bank eliminated overdraft early last year.
For years, the banking industry relied heavily on overdraft fees to increase profits. The Consumer Financial Protection Bureau found that the industry charged $15.5 billion in overdraft fees in 2019, of which three banks — JPMorgan Chase, Wells Fargo and Bank of America — made up 44% of that revenue. Those banks have since announced changes in their fee policies.
Truist executives said the changes were in the works for some time and were not impacted by the announcements by rivals at Wells Fargo and BofA. Industry analysts have said they expect more banks to announce fee reductions this year due to the competitive clout the large banks have in the industry.