BMO's Harris Bank latest to drop overdraft fees

posted: 80 DAYS 15 HOURS AGO

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CHICAGO -Harris Bank, a subsidiary of BMO Financial Group, on Thursday said it will eliminate certain overdraft fees, but will continue to enroll customers in automatic overdraft protection.

Harris said by the end of the year, it will eliminate overdraft and insufficient funds fees for accounts overdrawn $5 or less. The fees will also be capped at four per day.

According to its Web site, Harris currently charges $32 per overdraft or insufficient funds incident, plus $5 per day if the account remains overdrawn.

The Chicago-based Harris joined a string of other banks in modifying overdraft policies after they've come under increased scrutiny and potential new regulation.

But like some other banks, Harris will continue automatically enrolling customers for overdraft protection — the key practice that has come under fire in recent months.

Consumer advocates say automatic enrollment is misleading, because most people assume they can't spend more with debit cards than they have in their accounts, so they might not realize they're overdrawing their accounts when transactions are approved. That can lead to unpleasant surprises as penalty fees pile up. The Center for Responsible Lending said banks and credit unions collected nearly $24 billion in overdraft fees last year, up 35 percent from two years earlier.

Some of the nation's biggest banks, including Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo, said in recent weeks they will no longer automatically enroll customers for overdraft protection. That turnaround came after Sen. Chris Dodd, D-Conn., said he planned to introduce legislation to bar banks from automatically signing customers up for the programs.

Harris Bank has about 280 full-service locations in Illinois, Indiana and Wisconsin.

2009-10-08 14:50:27