Overdraft fees? Chase says not under $5.
Chase bank will eliminate overdraft fees on purchases costing less than $5 starting July 22. Say goodbye to that $40 cup of coffee.
The term “$35 cup of coffee” will no longer apply to Chase’s customers — unless that cup of joe costs more than $5. Due to an upcoming change to the bank’s fee policy, customers will not pay overdraft fees for small transactions that empty their accounts.
Starting July 22, Chase customers will not be charged an overdraft fee of $34 if the transaction is $5 or less, even if the account balance is negative.
Additionally, Chase will not charge the $10 overdraft protection transfer fee on transactions that are $5 or less.
However, customers shouldn’t assume that the changes will open doors to free coffee. Banks reserve the right to freeze or close accounts that repeatedly enter the negative-balance territory.
Overdrafts return to the spotlight
Last month, a proposed bill aimed to regulate the costs and frequency of overdrafts — building on the 2010 financial regulations that required customer consent to overdraw an account. Without consent, bank customers had their transactions denied and banks could not charge overdraft fees.
The new bill calls for fair overdraft fee pricing, overdraft-occurrence limits of one per month and six per year and the stop to the manipulation of transaction-posting order to maximize fees.
But, this bill was not responsible for the upcoming changes to Chase’s overdraft fee policy.
Rather, the changes stemmed from the filing of Chase’s $110 million settlement of a class-action lawsuit regarding overdrafts, cited a Chase spokesperson.
Filed in 2009, the lawsuit against 38 banks, including Chase, alleged that those banks manipulated the transaction posting order to increase the potential of overdraft fees. The settlement received preliminary approval last week.
In March 2010, Chase began posting transactions in chronological order, reduced the daily maximum overdraft limit from six to three and stopped charging overdraft fees when a customer’s accounts was overdrawn by $5 or less by the end of the day.
This March, Chase also lowered the fees for overdraft protection transfers and stop payment orders.