“Good news, we’re making changes to help you avoid fees,” Chase said in customer account statements this month, according to CNN.
The decision is related to a $110 million class action lawsuit settlement that the bank agreed to earlier this year in order to resolve claims that it was charging exorbitant overdraft fees. In 2009, consumers alleged that the bank reordered transactions in order to cause the account to overdraw and incur overdraft fees. The lawsuit is part of a broader class action movement taken against 30 big banks, many of which have already settled.
Chase updated its overdraft policy in 2010 to eliminate overdraft fees for accounts overdrawn by less than $5 at the end of a business day, a policy adopted by other major banks, CNN reports.
Many of America’s largest banks have altered their overdraft policies, though SunTrust and Chase are seemingly the first banks to lead the way in eliminating overdraft fees for transactions under $5.
Jean Ann Fox, director of financial services at the Consumer Federation of America, said that Chase consumers could still be impacted by excessive overdraft fees.
“If you don’t have enough money in your account to cover your purchase or withdrawal, the bank should deny it,” Fox said, according to CNN. “Even with Chase’s new policy, consumers who opt in to debit card overdraft [protection] will pay $34 to borrow $5.01.”
A Pew study released this month revealed that banks are still hitting consumers with excessive overdraft fees and have not resolved the issue of appropriate disclosure in overdraft protection programs. More banks are also charging extended overdraft fees, which are charged after an account remains overdrawn for a certain period of time.