Bank of America again raises fees on overdrafts

For the third time in 20 months, Bank of America Corp. has increased the
fees it charges customers who overdraw accounts or bounce checks.

The fee for each overdraft or returned item during the first day an account
is overdrawn was increased from $19 to $20, and the fee for each overdraft
or returned item on subsequent days was set at $35. But the problem with
this is, they do not advise you in a timely manner that you're out of money.
It takes a week for their postcard to come, And second, during that week,
every time you use a debit card at super market, instead of just having
the grocery clerk say 'sorry, your card's no good,' they let you get that
5$ worth of food and charge you 35$ for not knowing that you are out
of moola!

The Feb.16 2009 change eliminated the middle tier in the bank's overdraft fee
structure. Previously, the bank had assessed a $33 fee per overdraft or
returned item for the second, third and fourth days an account was in
imbalance, and charged a $35 fee for each additional day.

Under Bank of America's policy, the maximum number of overdraft fees that
can be charged per day is five.

Ernesto Anguilla , a bank spokesman, declined to say how much money the
bank collects in overdraft or bounced check fees or how much revenue the
fee increases would add to the total. He said the $20 initial charge for an
overdraft is one of the lowest in the industry.

"We do believe we price competitively," Anguilla said. Citibank is 34$ so
that's true.

Industry analysts say revenue from overdraft fees is substantial. Suzanne
Moot , a banking consultant with M&M Associates in Milton, said banks on
average collect two overdraft charges annually on each customer checking
account. But Moot added that a relatively small number of customers account
for most of the overdraft charges.

Greg McBride , a senior analyst with Bankrate.com, said banks have been
raising overdraft fees sharply because they offer a steady stream of income
that provides financial stability when interest rates fluctuate. He said
that because most customers aren't assessed the fees, they don't tend to
generate many complaints. (HUH? I am going in with my ten debits to
complain. BEFORE when I ran out of money my debit card stopped
being GOOD!.)

"Fee income is extremely important to bank profitability," he said.

A Bankrate survey of bank fees last fall found the average overdraft fee
had risen to a record $27.40, up 36 cents from where it was in a similar
survey in the spring of 2006.

Locally, Sovereign Bancorp Inc. charges a flat fee of $30 for insufficient
funds in an account, while Citizens Financial Group uses a three-tier
overdraft fee -- $17 for the first occurrence, $35 for the second and
third, and $38 for subsequent occurrences. A Citizens spokesman said the
lowest tier charge was cut from $19 to $17 last September.

Overdraft fees are often triggered when a customer makes a series of
transactions -- usually to pay bills -- that don't clear for a day or two.
Under that scenario, an account that is overdrawn can appear to still have
funds in it, and the customer continues to make purchases. Once the bills
clear, the account is then overdrawn.

Bank of America officials said they encourage customers to monitor their
checking account balance, either online, by phone, or through e-mail alerts
whenever the balance falls below a specified level. The bank also offers
overdraft protection that links a savings account or credit card to the
customer's checking account.

"We do work hard making it easier for customers to make sure their accounts
stay in a surplus state," said Diane Wagner , a Bank of America
spokeswoman.

A Bank of America employee, who asked not to be identified because he was
not authorized to speak officially about fees, said bank software regulates
whether an employee can erase an overdraft charge and grant a rebate to a
customer who complains about the charge.

The overdraft fee at Bank of America has inched up steadily since the
company purchased Fleet Financial Corp. in April 2004 and imposed its own
tiered overdraft fee structure in June 2005.

Fleet charged a flat fee of $25 for each overdraft and a $22 fee for each
returned check. Bank of America replaced Fleet's fee schedule with its
three-tier system, initially charging $19 for each overdraft or returned
item during the first day an account is overdrawn, $31 per item on the
second through fourth days, and $34 per item on subsequent days. The
maximum number of fees per day was five.

The bank raised the second and third tier fees last June, and this month
raised the initial fee and eliminated the second tier.

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