Ally Financial said Wednesday that it is ending overdraft fees entirely on all of its bank products, becoming the first large U.S. bank to end overdraft fees across its entire business.
Tanya Moutzalias / Ann Arbor News via AP file
Critics of the practice often cite what they call the $38 cup of coffee, where a bank customer uses a debit card to buy a coffee, overdrafts and ends up paying a $35 fee on top of the $3 drink. “Overdraft fees can be a major cause of anxiety," said Diane Morais, president of consumer and commercial banking at Ally Bank, in a statement."It became clear to us that the best way to relieve that anxiety was to eliminate those fees.”
Ally did not earn significant fees from overdrafts. The most Ally charged each customer for overdrafting an account was $25 per day, instead of per transaction. Morais said roughly one out of every 12 Ally bank customers overdrafted at some point. Ally does not expect that scrapping overdraft fees will have a major impact on the company’s full-year profit forecasts.
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