The past two years have been rough for many Americans, especially from a financial standpoint. During 2020, countless people lost everything, due to shutdowns.
Even Americans whose careers and livelihoods were not completely blown away are still not out of the woods just yet. Many of these folks are trying to pay bills, bring in customers, and otherwise remain financially afloat.
In 2021, one of the greatest economic challenges facing the United States is inflation. Everything across the board costs more money and it’s getting increasingly challenging for more Americans to keep up.
However, people who bank with Capital One may be very pleased to know about a new change the financial institution is making starting in 2022, as Fox Business documents.
No More Fees for Overdrafts
It is pretty commonplace for banks to charge overdraft fees; this happens when customers of the banks do not have the funds to cover purchases made with their debit accounts.
The specific amount of these fees varies from bank to bank; however, they can add up quickly, especially for folks wrestling with inflation and struggling to make ends meet as it is.
Capital One is completely eliminating overdraft fees, a move will cost the bank ~$150 million in lost revenue per year.
It used to charge customers $35 overdraft fees, capped at four such fees per day, or up to $140 daily.
— Morning Brew ☕️ (@MorningBrew) December 1, 2021
On Wednesday, Capital One announced its decision to do away with overdraft fees for humanitarian reasons. Per a statement from the bank’s CEO and founder, “protection” for individuals who overdraft their debit accounts is going to provide a “safety net” that’s in very high demand.
During the early stages of 2022, Capital One customers who have the bank’s current overdraft protection will be upgraded to a system that charges them nothing for overdrafting. Other customers who are interested in opting into this will be able to do so as well.
Will Other Banks Follow Suit?
There is a very real possibility of additional banks choosing to follow in the footsteps of Capital One in this regard; however, whether or not this happens remains to be seen.
Banks make quite a bit of money annually when they charge customers whose debit accounts go into the red. However, if Capital One’s policy leads to more people choosing to bank with them, different competitors could try to implement this measure or others like it.
Happy #GivingTuesday! If you plan to donate to a charity today (or any day) using your Capital One card, Eno will send you a summary of charges ahead of the tax filing deadline that may qualify as tax-deductible. pic.twitter.com/mwwIJ5M9tO
— Capital One (@CapitalOne) November 30, 2021
At the end of the day, banking is a business. The free market will ultimately determine whether or not Captial One’s policy change on overdraft fees works out well and lets them get business from customers who may choose other banks.
Since Capital One’s announcement on Wednesday, many social media users have posted online, praising the decision.
What do you think about Capital One’s decision to do away with charges for individuals who wind up overdrafting their debit accounts? Do you believe this will help ease the financial burdens many Americans are struggling with?