Capital One.Photo: Paul Taggart/Bloomberg via Getty
Starting in early 2022, all customers enrolled in overdraft protection will be automatically enrolled into a free overdraft protection service. For customers not enrolled in the service, transactions that would overdraw their account will be declined without a fee.
Capital One, which is the sixth largest retail bank in the U.S., says they are “excited to offer this service for free.”
“Long ago, we set our sights on reimagining banking,” Capital One founder and CEO Richard Fairbank said in a statement. “Eliminating overdraft fees is another step in our effort to bring ingenuity, simplicity and humanity to banking.”
The practice of charging overdraft fees is lucrative — with the banking industryearning over $15 billionin overdraft fees in 2019, according to the Consumer Financial Protection Bureau Banks.
A Capital One company spokesperson toldCNBCthat eliminating overdraft fees will cost Capital One an estimated $150 million in lost revenue yearly.
“Capital One’s complete elimination of overdraft and NSF fees is a landmark moment for American families,” Lauren Saunders, associate director of the National Consumer Law Center, said in the bank’s press release.
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Earlier this year, Sen.Elizabeth Warrenslammed the CEOs of JPMorgan Chase, Wells Fargo, Citi and Bank of America — the nation’s four largest banks — forcollecting a total of $4 billion in overdraft feesduring the pandemic.
Since Capital One’s announcement, Warren has also encouraged other big banks to “do the same.”
On Wednesday, the Consumer Financial Protection Bureau said in a statement that banks “continue to rely heavily” on overdraft and non-sufficient funds revenue.
JPMorgan Chase said in a statement that those numbers “don’t reflect changes we made earlier this year to our overdraft services, which have already helped 1.7 million customers,” a company spokesperson toldCNN.
PNC Bank and Bank of America have also introduced features to make customers less likely to overdraft, although neither have eliminated fees, per CNBC.
Capital One Financial Corporation made People’s annual 100 Companies That Care list in 2021. To nominate a business demonstrating outstanding respect for its employees, community and the environment, visitGreat Place to Work.
source: people.com
