NEW YORK (MainStreet) — Bank of America has added more twists and turns to its overdraft policy than Baskin Robbins has flavors of ice cream: This time it's a text message notification system that prompts account holders to opt into overdraft coverage at the point of transaction if the amount would put them in the red.
The bank is reportedly in the early stages of testing this text message application, with the goal of advancing it to its customer base early in 2012, if all goes well. The app marks a significant departure for the bank on its overdraft policies. In the hoopla surrounding the Dodd-Frank financial reform bill and the CARD Act in 2010, both of which put major caps on the fees and penalties that financial institutions could stick to their customers, the bank has gotten ahead thanks to some curtailing fees on its own terms.
Specifically, in March 2010, Bank of America (Stock Quote: BAC) said it would reject debit card purchases from customers at the point of transaction if they didn’t have enough cash in their checking account to cover the purchase. On March 10, 2010, the Charlotte, N.C.-based bank said the change would reduce the chances of a customer ‘inadvertently’ overdrawing his or her checking account, and would aid in eliminating onerous overdraft fees, which had climbed as high as $36 per overdraft across the banking industry."Our customers have been clear that they want to know if a purchase is going to overdraw their account," Susan Faulkner, a deposits and card products executive, said at the time. "Our solution is simple, clear and helps customers control their finances by reducing the possibility of over-extending themselves at the point of sale with a debit card."