By: Joe Gillen
Responsible overdraft protection programs are one of the many reasons more Americans are turning toward smaller financial institutions, such as community banks and credit unions. And it looks like megabanks are finally catching on and rethinking their own policies.
Chase is one of the first large banks, after SunTrust, to adopt a more consumer-friendly overdraft policy, recently announcing it will waive fees for small transactions of less than $5. In another move that follows the sound policies of community banks and credit unions, Chase will also begin processing transactions in chronological order. The announcement garnered a wave of approval from consumers and smaller institutions alike, who agree that responsible policies benefit customers.
Following the announcement, analysts say that many other large banks are expected to follow suit, namely to rebuild the battered reputations that have resulted from several class-action lawsuits relating to predatory overdraft policies. For example, many of the country's largest banks have agreed to multi-million dollar settlements after engaging in less-than-consumer-friendly policies. Bank of America recently agreed to a $410 million settlement, and Citizen's Bank agreed to a payout of $137 million. Prior to changing its policies, Chase also paid a settlement of $110 million.
According to Money Rates, other banks are taking different approaches to overdrafts to better mimic sound overdraft standards. Huntington, a regional bank that operates in the Midwest, has developed an asterisk-free checking program, which waives overdraft fees if customers deposit enough money into their account the following day to cover their costs.
While big banks still have a long way to go before offering the types of responsible and affordable overdraft programs that are currently provided by their smaller counterparts, some institutions are making small efforts toward re-evaluating their services.