JPMorgan Chase, the nation’s largest bank
by assets, earlier this year waived overdraft fees
for customers whose accounts were overdrawn
by $50 or less at the end of the business day. The
bank said it will give customers 24 hours to bring
their accounts back to $50 or less overdrawn to
avoid a fee.
From 2015 through 2020, JPMorgan annually led
the industry in overdraft fees collected. Through
the first nine months of 2021, Wells Fargo took
in the highest amount of overdraft fees, slightly
more than $1 billion, according to S&P Global.
Back in June, Ally Financial, the 18th largest bank
by assets, said it would get rid of overdraft fees
across all of its products. Ally specifically cited the
racial inequity seen with overdrafts as a reason to
stop charging the fees.
“It was the right thing to do,” said Diane Morais,
president of consumer and commercial banking
products at Ally Bank.
Ally earned relatively little from overdraft fees. The
bank told investors that getting rid of overdraft
fees would have no material impact on its profits.
“This is likely a revenue line item that deteriorates
over the long-term and banks will need to find
other areas of fee revenue to offset this downward
trend,” said Kyle Sanders, an analyst at Edward
Jones who covers Wells Fargo, PNC and several
other large retail banks.
One way that banks will likely make up a drop in
overdraft fee income could be a return to monthly
account fees, which would be an industry shift
after decades of advertising “free checking” to
their customers. Both Wells Fargo and Bank of
America charge $5 a month to use accounts that
do not allow customers to overdraft.