Bank of America says that it will reduce overdraft fees and improve checking account options.

Banks earn billions of dollars per year from overdraft fees

From overdraft fees banks earn billions of dollars per year and as financial system reform remains in national focus, consumers and lawmakers both have have asked banks to revamp their penalties.      

         

Starting Oct. 19, it has been said by Bank of America says that it will allow customers to choose the ability to outspend their accounts, and no fees will be charge by them for more than four items per day or on overdrawn balances of less than $10.

Limitation on number of overdraws

In June, the bank will put a limitation on the number of times in a year consumers can overdraw their accounts using debit cards in stores, and new customers will be allowed to opt out of overdrafts when they open their accounts.

Report from Moebs Services

Last month a report from Moebs Services has elaborated that this year U.S. will collect a record $38.5 billion in overdraft fees, with nearly all the revenue paid by just 10% of customers.

It has also been said by the Moebs report that the national median overdraft fee rose to $26 from $25 in 2008, while larger Wall Street banks charge a median of $35 as an overdraft fees.

A credit card reform act

In May, President Obama signed into law a credit card reform act, and the first part of its plan has been unveiled by his administration. So far, the act has urged credit card issuers to give customers more advance notice before that they make any changes in a contract and to mail bills out earlier.

In February more significant changes are expected, when the second half of the act is implemented.

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