NEW YORK – Capital One said on Wednesday it would remove all overdraft fees, the latest bank to do so this year and one of the largest financial institutions to avoid the long-hated practice.
The Virginia-based bank said it would still allow overdraft clients, but no longer charge a fee to do so. All eligible customers can opt for a free overdraft at any time, the bank said.
A number of other banks have announced this year – Ally Bank and regional banking giant PNC, for example – that they will end overdraft fees or create programs that significantly reduce the risk that a customer will be hit by fees. of overdraft.
In an email to employees, Capital One CEO Richard Fairbank said the move was part of âour effort to bring ingenuity, simplicity and humanityâ back to the bank.
That said, overdraft fees are still common practice in the banking industry, often forcing millions of bank customers to pay $ 34 for a cup of coffee. The Consumer Financial Protection Bureau on Wednesday released a study that showed the industry generated $ 15.5 billion in overdraft fees in 2019, of which three banks – JPMorgan Chase, Wells Fargo and Bank of America – accounted for 44% of that revenue. .
Consumer advocates applauded the move, especially since Capital One is one of the country’s largest banks.
âCapital One’s complete elimination of overdraft and NSF (insufficient funds) fees is a historic moment for American families,â Lauren Saunders, associate director at the National Consumer Law Center, said in a statement.