Citing the nation’s ballooning unemployment rate, Bank of America has decided against its plan to raise overdraft fees from $35 to $39, reports The Wall Street Journal (”Bank Suspends Overdraft Fee Increase,” April 13, 2009).

Along with the fee cancellation – which could either be considered an act of kindness for the nation’s unemployed or an attempt to appease lawmakers who are increasingly scrutinizing banking practices – Bank of America says it’s going a step further to help customers. It’s also rolling out a program to help customers who have lost their jobs.

Under the program jobless customers could have their monthly account maintenance fees waived for three months and could have the fees they’ve incurred for having insufficient funds or for overdrawing on their account be refunded. The program may also allow for fees to be removed from jobless customers’ accounts.

The bank’s announcement comes as Congress and the Federal Reserve are considering reforms to the way banks handle these fees. Legislation before Congress, if approved, would require banks to notify consumers making a transaction at an ATM or a point-of-sale terminal that the transaction could trigger an overdraft, giving consumers the choice to cancel the transaction or accept the overdraft service and associated fee.

One Fee Down, Other Fees Remain

Although Bank of America will be canceling its overdraft fee increase, the bank is still going ahead with plans to assess a one-time fee of $35 on customers whose accounts remain overdrawn for more than five days. The bank is also raising monthly maintenance fees on certain accounts, as well as upping the balance requirements needed to avoid fees, The Wall Street Journal reports.

These policy modifications follow on the heels of changes the bank implemented in April when it cancelled a $25 discounted overdraft fee for first-time overdraft offenders and raised the maximum number of times a customer could incur a fee for overdrawing in a single day.

Overdraft fees, said Mike Moebs, chief executive of Moebs $ervices Inc., are a major source of revenue for banks and credit unions, who this year alone are expected to rake in more than $40 billion from the fees. Financial institutions make as much as 75 percent of their consumer-fee income from overdraft and insufficient funds charges.

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