Dive Brief:
- BMO Harris, the U.S. arm of the Bank of Montreal, became the latest in a slew of large lenders to cut down on overdraft and non-sufficient funds (NSF) fees, the company announced Thursday in a press release.
- The Chicago-based bank is slashing — from $36 to $15, starting this fall — the amount it charges users each time they overdraw their accounts. That mirrors, by amount, overdraft fee changes M&T Bank and Huntington Bank announced in February and March, respectively.
- BMO plans to eliminate overdraft transfer fees July 12, and NSF fees beginning Aug. 23, it said. The changes will affect accounts for consumers and small businesses.
Dive Insight:
The adjustments to BMO’s fee model are intended to alleviate the financial stress consumers and small businesses feel as prices for everyday items rise as a result of inflation, the bank said in its press release.
“Our latest fee changes mark another significant milestone for BMO in our journey to empower customers to achieve their financial goals and to make real financial progress," said Paul Dilda, head of consumer strategy at BMO Harris. "Given the current economic climate, we know it is more important than ever to help our consumer and small-business customers work toward their financial goals."
At the same time, BMO’s decision to revamp its fee model comes as lawmakers and regulators call on banks to curb their reliance on overdraft and related fees.
Attorneys general in 17 states and the District of Columbia wrote the CEOs of JPMorgan Chase, Bank of America, Wells Fargo and U.S. Bank in April, asking each to “commit immediately” to eliminating overdraft and similar fees “on the same timetable as Citi.”
Citi, the largest bank yet to jettison the fees, said in February it would eliminate overdraft, returned item and overdraft protection fees by this summer.
Rep. Carolyn Maloney, D-NY, and Sens. Elizabeth Warren, D-MA, and Cory Booker, D-NJ, followed up in May, asking three of those banks why they continue to charge the fees.
Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), condemned “exploitative junk fees charged by banks and financial companies” and launched an initiative to stem the practice in January.
That same month, Bank of America committed to reducing the cost of its overdraft charges from $35 to $10.
Thursday’s announcements mark the second time BMO has altered its fee model in recent months. The bank in November reduced — from four to three — the number of overdraft and NSF charges a customer can run up per day. It also eliminated consecutive-day overdraft fees for accounts that remain in the red for an extended period of time. And it increased the threshold at which customers incur an overdraft fee from $5 to $50, American Banker reported.
The bank did not say how much fee revenue it expects to forgo annually as a result of the new adjustments to its fee model.
BMO is in talks to acquire Bank of the West, the U.S. retail presence of French lender BNP Paribas, in a deal valued at $16.3 billion. The deal would expand BMO’s footprint on the West Coast, establishing firm footholds in San Francisco and Los Angeles.
A public hearing for the deal is slated to be held July 14.
Recent changes to overdraft and related fees at Bank of America, Wells Fargo, U.S. Bank, Truist and Regions could save American consumers up to $2 billion annually, according to a February report from Pew.
