With consumer debt rising, many banking and credit customers are looking for ways to cut down their expenditure on loan repayments, fees, and interest.
Now, Capital One has become the first big US national bank to completely end all overdraft fees for its customers, and this change will apply to all the bank’s financial products.
Capital One announced on Wednesday that it plans to eliminate all fees for overdrafts and non-sufficient funds, while continuing its free overdraft protection for account holders.
This follows smaller banks, such as Ally, which recently removed overdraft fees. Capital One is the sixth-largest retail bank in the US, making it the first major bank to make this change.
Changes to the banking regulations over a decade ago have meant an increase in complaints about overdraft fees. When customers used their overdrafts, banks would honor the purchase but add a $30 fee to the account per transaction.
Under the new regulations, customers are entitled to “overdraft protection”, as long as they opt-in. If they don’t do this, they risk being charged a fee for a declined transaction.
As part of the changes to Capital One’s policies, overdraft fees will be removed from its overdraft protection
This means that customers that have opted in and for overdraft protection overdraw their accounts with a purchase won’t be charged a fee and the purchase will be honored by the bank.
Consumer action groups hope that other banks follow this example and eliminate overdraft fees, as they have proven to be extremely costly for customers.
“The bank account is a cornerstone of a person’s financial life,“ said Richard Fairbank, Capital One’s founder, and CEO.
He added, “It is how people receive their paycheck, pay their bills, and manage their finances. Overdraft protection is a valuable and convenient feature and can be an important safety net for families. We are excited to offer this service for free.”