topic Re: Capital One says it is ditching all consumer overdraft fees in Personal Finance

Capital One says it is ditching all consumer overdraft fees

gdale6 — Wed, 01 Dec 2021 15:17:28 GMT

It’s the largest U.S. bank yet to end the industry practice of charging customers a hefty fee, typically $25 to $35 each instance, for allowing transactions that exceed a customer’s balance, according to the McLean, Virginia-based lender.
The move will cost the bank an estimated $150 million in lost revenue per year, according to a company spokesperson.
Customers who paid the fees will be automatically rolled over into a free overdraft protection service early next year, the bank said. Those who opt out of the service will simply have overdrawn transactions declined at no fee.

https://www.cnbc.com/2021/12/01/capital-one-says-its-ditching-all-consumer-overdraft-fees.html

Re: Capital One says it is ditching all consumer overdraft fees

CreditMagic7 — Wed, 01 Dec 2021 18:59:28 GMT

@gdale6 wrote:
The move will cost the bank an estimated $150 million in lost revenue per year, according to a company spokesperson.

This one line is hilarious. In finance tech talk yeah the new change might do that, but you can bet your bottom dollar that they already drawed up plans well in advance to easily make up for that customer fee revenue with other schemes called methods.

Re: Capital One says it is ditching all consumer overdraft fees

Adkins — Wed, 01 Dec 2021 21:01:34 GMT

What @CreditMagic7 said. They aren't doing this out of the kindness of their hearts - as a bank they have none. They are in the business of making money. That's great for customer but they'll make up the money difference elsewhere. 🤔

Re: Capital One says it is ditching all consumer overdraft fees

ghgirll40 — Thu, 02 Dec 2021 03:43:24 GMT

@Adkins wrote:
What @CreditMagic7 said. They aren't doing this out of the kindness of their hearts - as a bank they have none. They are in the business of making money. That's great for customer but they'll make up the money difference elsewhere. 🤔

I think they want to compete at a higher level in the banking industry. This is a clear attempt to gain more customer traction. I think credit unions are still a consumers best bet having worked for both types.

Re: Capital One says it is ditching all consumer overdraft fees

shalimarcat — Fri, 10 Dec 2021 02:49:12 GMT

This is interesting because I bank locally, and I noticed last year that the few times I had the misfortune to get overdrawn, I wasn't charged a fee. My transaction was not declined, either. I thought that either it was due to them being more understanding because of the pandemic, or because the branch manager is my former boss and was being extra nice. I have noticed that the bank still isn't charging overdraft fees.

I worked in banking for several years. While I understand the reasoning behind overdraft fees, I also recognize that they can be part of the problem. If someone gets overdrawn, the fees just dig the hole deeper, making it far more difficult for a customer to correct their mistake and get back on track. Also, some banks would alter the order of items clearing an account so that they could charge more overdraft fees. This has caused many to move away from traditional bank accounts. Hopefully, this move will bring them back.

Re: Capital One says it is ditching all consumer overdraft fees

CreditInspired — Sat, 18 Dec 2021 11:15:00 GMT

This is good news. While I havent had an OD fee in over 30 years, I still vividly recall them. It was a cyclical and chaotic time where I thought I would never get off that catastrophic merry-go-round. And once I did, I promised myself, never ever again.