M&T Bank cuts overdraft fee to $15, scraps other charges

M&T Bank is cutting its overdraft fee from $36 to $15 and making several other changes that will save customers money but also reduce its service-fee revenue.

The Buffalo, New York-based bank is joining other banks that are curbing their overdraft charges as they face competition from challenger banks offering no-overdraft-fee accounts and heightened scrutiny of their practices from Biden administration regulators.

M&T will also eliminate nonsufficient fund fees, which customers can incur when their transactions are rejected, as well as scrap charges customers pay when they transfer money from a linked deposit account to avoid an overdraft. Customers will not be assessed more than one overdraft fee per day.

The changes “make our banking services more accessible and give our customers more choice and flexibility in managing their finances — especially during challenging times,” Chris Kay, M&T’s head of consumer banking, business banking and marketing, said in a press release.

M&T Chief Financial Officer Darren King hinted at likely changes in an interview last month, saying the $155.1 billion-asset company was evaluating the steps that other large and regional banks were taking to cut back on the fees.

“We’re looking and going back and saying, ‘How do our changes stack up with competitors?’ ” King said last month.

In slashing its overdraft fee to $15, M&T is taking a step similar to that of Bank of America, which last month announced it was cutting its overdraft fee from $35 to $10. First Citizens Bancshares in Raleigh, North Carolina, said shortly after that it also was lowering its overdraft fee from $36 to $10.

Two other banks, Capital One Financial in McLean, Virginia, and Detroit-based Ally Financial, are eliminating overdraft fees permanently.

An M&T spokesperson declined to say how much the company expects fee revenue to decline because of the changes.