Hampton Roads consumers stand to save money as some banks reduce or eliminate ‘junk fees’
“Junk fees” drain tens of billions of dollars each year from Americans’ budgets, according to the Consumer Financial Protection Bureau.
The costs to consumers can appear in various forms, including late penalty, overdraft, return, out-of-network ATM, money transfer and inactivity fees.
Now, some Hampton Roads banks have reduced their consumer fees while others have eliminated some charges altogether.
The changes come after such fees have come under the scrutiny of U.S. lawmakers and the Consumer Financial Protection Bureau. The Office of the Comptroller of the Currency, a regulatory agency for national banks, expressed concern about the effect of overdraft fees on lower income individuals late last year.
Suffolk-based Towne Bank examined the consumer fees immediately and initiated three big changes on April 1, President and Chief Operating Officer Brad Schwartz said.
Towne totally eliminated the $42 fee for non-sufficient funds and the $13 fee associated with transferring funds from a savings account to a checking account if there’s an overdraft. The bank now allows up to $50 to be overdrawn without charging any fees, Schwartz said.
“We know with inflation and gas prices, that it’s even tougher out there. The focus was on trying to help people who frequently just didn’t have enough funds in their account,” Schwartz said. “This was income we used to earn, but we decided it was the right thing to do.”
Richmond-based Atlantic Union Bank reviews its overdraft and insufficient fund fees and practices on a regular basis to determine any enhancements based on developments in the industry and customer expectations, said Alison Holt-Fuller, head of product and enterprise first line risk management.
Effective in the third quarter, Atlantic Union eliminated its non-sufficient fund fee for consumer deposit accounts and eliminated the fee assessed when transferring funds from one deposit account or line of credit to cover an overdraft, Holt-Fuller said. The bank also decreased the number of overdraft fees that may be assessed in one day and established a no-overdraft fee checking product to provide consumers with greater access to lower fee bank accounts.
Bank of America said it stopped charging for insufficient funds and returned item chargeback fees. The bank also removed its overdraft protection transfer fee, lowered the overdraft item fee from $35 to $10 and decreased the number of fees to two rather than four per day.
Hampton-based Old Point National Bank recognizes the hot and important issue and is focused on reviewing and evaluating its fees, marketing director and vice president Laura Wright said, although it didn’t have changes to share at this time.
Competition is also creating pressure for banking changes.
Newport News-based Langley Federal Credit Union wants all of its members to get a fair shake where no one has to pay exorbitant fees for the occasional mistake, President and CEO Tom Ryan said.
That’s why, at the start of 2020, the credit union capped the number of times per month a member could be charged for insufficient fund transactions. Fred Hagerman, senior vice president and chief marketing officer, said the credit union also reduced the actual fee from $30 to $10. And Langley’s courtesy pay, a service where it covers the transaction even when funds are short, was reduced from $30 to $20 with a $10 minimum before fees are charged.
“This means that a simple overdraft slip-up of a few dollars won’t incur the fee at all,” Hagerman said. “These are not small changes. Approximately 40,000 members will save over $4.5 million in fees annually as a result of these changes.”
Sandra J. Pennecke, 757-652-5836, sandra.pennecke@insidebiz.com
