Chase Does Us All A Favor, Nixes Overdraft Fees For Purchases Under $5

Remember when you began vehemently swearing upon realizing that before you used your bank card to buy a $3 iced coffee, you were in the red already, making that a $37 iced coffee and overdrawing your account even more? That’ll change for Chase customers, as the bank announced its going to do its customers a solid by dropping overdraft fees for purchases under $5.

Starting July 22, JPMorgan Chase is ditching that fee, in an attempt to eliminate multiple overdraft fees for small purchases, reports the New York Times.

“Good news, we’re making changes to help you avoid fees,” Chase told customers in a recent notice with their statements. “For purchases of $5 or less that overdraw your account, we’ll no longer charge you an insufficient funds fee, returned item fee, or overdraft protection transfer fee.

In March 2010, Chase changed its overdraft policy so that there would be no overdraft fees applied if a customer’s overall balance was only overdrawn by $5 or less at the end of the business day, so five must be their magic number.

The reason Chase is going ahead with this policy is because of settlement negotiations from a case resolved in February over how it and other big banks process debits and and charged overdraft fees.

Your turn, fellow big banks. The only other bank thus far to have a similar policy is SunTrust, apparently, which will not assess overdraft fees on purchases of $4.99 or less.

*Thanks for the tip, Howard!

Chase to Drop Overdraft Fees for Purchases of $5 or Less [New York Times]

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  1. rookie says:

    I’m not a Chase customer, never will be. I’ll only believe this if nobody gets dinged for a year…

  2. homehome says:

    some ppl are gonna really take advantage of this lol.

  3. MrMagoo is usually sarcastic says:

    I predict within the year we’ll see a post from someone crying about how their account was overdrawn by $5.02, and the heartless Chase reps are refusing to refund the $35 overdraft fee.

  4. Coffee says:

    Remember when you began vehemently swearing upon realizing that before you used your bank card to buy a $3 iced coffee, you were in the red already, making that a $37 iced coffee and overdrawing your account even more?

    Please note that the overdraft will still affect you if you buy frappucinos at Starbucks, as your bank account is likely to be overdrawn more than $5 after the purchase, regardless.

  5. Loias supports harsher punishments against corporations says:

    So this was done only because of litigation. Not surprised.

  6. SJPadbury says:

    This seems…. reasonable?

    Like, how you should treat a customer you have a long-term business relationship with?

    I’m sooooo confused….

    • drjayphd says:

      Didn’t stop TD Bank from going fully evil. When they bought out my old bank, they didn’t charge ATM fees and would actually refund fees charged by other ATMs. A few years later, it was ATM fees and overdraft fee-maximizing processing of transactions for EVERYONE!

      Then I switched to Chase as soon as they offered free money.

  7. eldergias says:

    People should really stop using debit cards. This is a nice move by Chase, but the entire issue would disappear (along with many others) if people would ditch the debit cards altogether. If you don’t want or wouldn’t be responsible enough for a regular credit card, you can get a pre-paid credit card. Its like a debit card, but you cannot possible spend one more penny than you have already loaded on it. People are only continuing to use debit cards because it is what they are used to doing and it is easy to just keep doing it.

    • dragonfire81 says:

      I prefer plain old cash myself.

    • Aliciaz777 says:

      Every prepaid debit card I’ve ever seen charges a monthly fee that’s anywhere from $5 to $15 and that fee is charged automatically regardless of whether you have money in it or not. And if you don’t use the prepaid card for a few months? Well then as soon as you put money on it they take their fees for the months you didn’t have a banalce on it and didn’t use it.

      I don’t want anything to do with credit cards either because the interest rates are too high. I’ll stick with my no interest, no fees debit card.

    • rookie says:

      I have my debit card from my little local bank set up so that if I should inadvertently try to buy something that I haven’t the money for, the card will be declined.
      The only place I will not use it is online.

    • phsiii says:

      Doh, or just opt out of allowing overdrafts. When debit started becoming popular, banks were all worried that they’d go broke because they wouldn’t be able to make the big money on interest and fees. Then someone had a brainstorm: allow overdrafts on debit and charge big fees! Whee!

      It took legislation to require that to be opt-in (as of July or August 2010, IIRC).

    • incident_man says:

      My wife and I use our Costco American Express cards everywhere we can and we pay it off every month. If we can’t afford to buy something, we don’t. The best part is there are no overdraft fees…zip….nada….zero. Where AMEX isn’t accepted, we use our USAA VISA.

      We’ve used our credit union’s debit card like only six times in the three years we’ve had the account. It’s not because we’re afraid of the overdraft fees or anything like that; it’s just that we get more bennies out of AMEX than with the debit card. The AMEX rewards alone by far outstrip the Costco membership fee.

  8. Aliciaz777 says:

    Holy crap! A bank doing something that BENEFITS the customer!? *faints*

  9. TinaBringMeTheAx says:

    This is hardly eleemosynary.

    From the article:

    Chase’s notice to its customers didn’t mention that its latest policy change resulted from settlement negotiations to resolve a class-action suit filed against Chase and other big banks over the way they processed debits and charged overdraft fees. By processing payments in the order from largest to smallest, banks were able to maximize the amount of overdraft fees charged

    Chase agreed in February to settle the suit for $110 million. On May 24, a Federal District Court judge in Miami gave preliminary approval to the settlement, and final approval is expected by the end of the year. The settlement noted that Chase agreed to adopt a policy of not charging overdraft fees on debit card transactions of $5 or less and to keep that policy in place for “at least two years.” (Chase’s new policy applies to purchases made with checks, too).

  10. gman863 says:

    To make up for this, watch them raise the overdraft fee on purchases over $5 in three…two…one…

  11. coffee100 says:

    Why not just decline the charge?

    Oh, because that wouldn’t allow them to gouge their customers.

    Every bank’s motto is “fuck the poor.” No exceptions.

    • SeanPatrick says:

      Why are people ALWAYS putting the responsibility on the banks.

      You can avoid ALL overdraft fees by not spending more money than you have. It is THAT SIMPLE.

      Take responsibility for your OWN actions.

      • incident_man says:

        Well that’d be all fine and dandy except for 2 things:

        1. Sometimes unpredictable things happen (I know…..amazing, right?)
        2. Banks purposely re-order transactions from highest amount to lowest in order to extract the most overdraft fees they can.

        Either way, using a credit card makes far more sense to me, especially if you have one that offers cash back rewards. Of course, being responsible with your money definitely helps.

  12. Nyxalinth says:

    I have gotten my ass kicked by banks over piddly amounts. Usually, it’s something I buy like a soda for 1.50 then finally, SIX MONTHS LATER, the charge goes through and screws me over. I stopped doing banks back in 2006 because of this crap, but I think I will look into Chase.

  13. drjayphd says:

    I KNEW there was a reason I switched from TD Bank to Chase. Turns out it’s that Chase WON’T pile $175 worth of overdraft fees on me because I bought coffee a couple days, then a big payment unexpectedly went through, leading them to structure my transactions for maximum overdrafts.

    Fuck you very much, Regis Philbin.

  14. Abradax says:

    So can I buy my new 2000 dollar computer in 4.75 increments and have no fees?

  15. Jawaka says:

    People here will still find a reason to complain about this.