Will Overdraft Fees Soon Be a Thing of the Past With Your Local Bank?
I've had a few times in my life when the stars didn't align right and I had more money going out of my checking account than what was going in; thus, I got hit with overdraft fees and did it ever make matters worse! So what if your local bank decided to do away with the overdraft fees?
In a story from thepennyhoarder.com, one bank has boldly stepped forward to eliminate overdraft fees with their customers. This may be a bank you haven't heard of if you don't use online banking-Ally Bank.
Ally Bank is an online-banking institution. They reported they were dropping their overdraft fees for their customers. Now this is really big because a lot of banks make profits off those overdraft and non-sufficient funds fees. In fact, the article goes on to say:
"Ally dropping its overdraft fees is impactful news for the banking industry as a whole, which makes billions off of overdraft and non-sufficient funds fees."
So what about those that abuse the system and just go ahead and write checks even though there's not enough money in their account...and they know it? The beauty of online banking is when you make purchases you use a debit card, so if you don't have enough funds in your account, most transactions won't go through.
In reality this makes sense with dropping the overdraft fees because the ones that are racking up the overdraft fees are the ones that don't have enough money in their accounts to begin with so adding on a fee to make their account even more negative just doesn't make sense.
Some banks are even going to a "cushion period", a 24-hour period where they are allowing their customers to deposit the necessary funds into the account to cover any possible overdrafts.
Last but not least, this should be noted. The article says this:
Banks provide checking and savings accounts services and are allowed to make a profit, which is where overdraft protections and fees come in.
Now I'm not saying that all banks are going to go to this dropping of the overdraft fees, but don't be surprised if you see some changes in the banking industry.
I still bank local rather than online, but for some online banking provides the convenience they're looking for.