Understanding Bank America's Cancellation of Overdraft Fees on Debit Card Charges

The headlines read: Bank America Will Cancel Overdraft Fees on Debit Card Charges.

Uh, not exactly. What they are doing is cancelling the overdraft service for debit cards. There will be no fees on overdraft debit cards because there will be no overdrafts on charges.

"Bank of America Corp. will stop charging overdraft fees on debit card transactions and will instead block a sale if a customer lacks adequate funds, the company announced Wednesday," is the way Bailout Sleuth reports it.

Customers will not be able to make debit card transactions if the cost exceeds their account balance. They will, however, be able to make ATM withdrawals if they are overdrawn, but the machine will flash a warning letting customers know they are about to overdraft their account and be assessed a $35 fee. Checks as well as recurring debit charges, such as automatic bill paying, will still be charged overdraft fees.

So basically this is about creating inconvenience, and B of A making nice to the government.

Not surprisingly, consumer interventionists were ecstatic, but not satisfied.

The Center for Responsible Lending urged the regulators to come up with even more strict rules that would limit the number and amount of overdraft fees on debit and ATM transactions.

CRL is a front organization of the Self-Help Credit Union, which is a credit union that appears to receive a lot of state and federal financing which in turn is loaned out to minorities, women and those living in rural areas.

Bottom line commercial banks are a major competitors to SHCU, otherwise SHCU wouldn't spend so much time harassing them. If SHCU can make these overdraft loans without charging fees, they should just stand on street corner and pass out the cards. I'm sure minorities and women will be more than happy to test out the cards.