Overdrafts

Some institutions for more than a year have reduced or eliminated overdraft and funds transfer fees to help members hard hit by the economic downturn, but it's unclear how much longer they can keep coasting on other sources of noninterest income.

The San Antonio company will no longer charge fees on transactions of $100 or less that take checking account balances into negative territory, as long as the customer has a $500 monthly direct deposit set up.

The company will give retail account holders 24 hours to cancel upcoming payments that would put them in the red. The move addresses customers’ top gripe and will have benefits that offset the lost income, executives say.

The Cities for Financial Empowerment Fund, a nonprofit that seeks to improve financial stability of low- and moderate-income households, validated the account under its Bank On initiative.

More banks are discussing the status of overdraft practices, and the industry is bracing for the potential of new regulations under President-elect Joe Biden.

The bank disclosed in a regulatory filing that it is in the process of responding to a civil subpoena from the Consumer Financial Protection Bureau. It is the latest bank to come under regulatory scrutiny for the fees charged to consumers who overdraw their accounts.

Deposits have piled up, curtailing overdrafts and other fees. The trend could force lenders to find other ways to make money — or start cutting to the bone.

The fees have helped banks recoup costs of free or low-cost checking accounts for decades, but they can penalize low-income customers and drive them away from banking. Is there a better way?

The bank said the account is geared to consumers who want better control over their spending or are new to banking.

T-Mobile Money is now being offered to the 150 million customers of the combined wireless carriers, which merged this spring.