Bank of America, the second largest bank in the United States, announced that policy changes enacted earlier in the year have shown a recent drop in overdraft fees by 90 percent.
The bank announced on Wednesday that the swift and steep decline for June and July is compared to the same period last year, affecting more than 35 million consumer checking accounts, the company said.
In early January, Bank of America announced that it would be eliminating non-sufficient funds fees and would reduce overdraft fees from $35 down to $10. Banking customers could totally avoid overdraft fees by enrolling in the bank's "SafeBalance" checking account. 45 percent of new checking accounts for the bank are now enrolled in that type of account.
As Market Watch reported, other banks like PNC, Capitol One, and the online bank Ally announced in 2021 that they would be eliminating overdraft fees or exploring ways to reduce them dramatically.
The moves come as consumers try to protect bank accounts amid rising inflation, increases in rent, and other living costs.
As the Associated Press reported, the Federal Reserve has been raising interest rates to slow the economy and temper inflation. Still, investors remain concerned that it could hit the brakes too hard and send the economy into a recession. The Fed in July raised its benchmark interest rate by three-quarters of a point for a second-straight time.
While Federal Reserve policymakers expected the economy to expand in the second half of 2022, many suggested that growth would weaken as higher rates take hold.
Slower growth, they noted, could “set the stage’’ for inflation to gradually fall to the central bank’s 2% annual goal, though it remained “far above’’ that target. But the policymakers made clear that, for now, they intend to continue raising rates enough to slow the economy.