Ally Bank ends overdraft fees, a first for large US banks

[StrictlyRockers]

NEW YORK (AP) — Ally Financial said Wednesday that it is ending overdraft fees entirely on all of its bank products, becoming the first large U.S. bank to end overdraft fees across its entire business.

It’s a major move by Ally, one of the nation’s largest banks, and for the industry, which has been reliant on overdraft fees for decades to boost profits, often at the expense of poorer Americans who can’t afford to pay such fees in the first place.

Critics of the practice often cite what they call the $38 cup of coffee, where a bank customer uses a debit card to buy a coffee, overdrafts, and ends up paying a $35 fee on top of the $3 drink.

In its announcement, Detroit-based Ally cited specifically the impact that overdraft fees have on Black and Latino households, which are historically poorer than their white counterparts and are hit with overdraft fees more often. It’s also a common reason why Black and Latino households choose to be “unbanked,” that is being without a bank account, in order to avoid the fees that often come with these accounts.

“Overdraft fees can be a major cause of anxiety,” said Diane Morais, president of consumer and commercial banking at Ally Bank, in a statement. “It became clear to us that the best way to relieve that anxiety was to eliminate those fees.”
https://apnews.com/article/business-8a105eafc5cd233ead34434fdf61189d

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1. Good move

Ally is an online-only bank, with no brick & mortar branches. Normally I'm wary of online financial institutions, but Ally started out as GMAC, the finance arm of General Motors, so I know it has deep roots and isn't some internet startup. I opened an account years ago, and my experience has been positive.

[MichMan]

2. So are they going to let people run negative balances?

Or will all NSF checks get returned without being paid?

[GregariousGroundhog]

3. Per the article, Ally will allow negative balances

The article does not state how far though and does not state what will happen if they fail to bring it current within six days:

Customers who do overdraft with Ally will get their transactions approved at the bank’s discretion, with the smaller transactions likely to be approved. Customers will have six days to bring the account back into positive territory.

[Hugin]

4. A friend of mine once bought a very expensive sandwich...

In fact, it cost over $300. Also, it caused state and federal tax problems. Which nearly cost them their employment.

I know this, because, I had just enough extra to help pay it off. I then took them by the hand and helped them close the account at that fucking bank. (Which I, to this day, spit after saying it's name.)

Now, no matter what, my friend always makes two separate transactions. Always making deposits first and payments second.

I don't have a bank account.