WEISER — As part of Zions Bank’s ongoing commitment to provide products and services that best serve clients’ financial needs, the bank will be making changes to its overdraft practices effective July 13. This action will significantly reduce overdraft and non-sufficient funds fees for its consumer and small business deposit accounts.
These changes will:
• Eliminate the Continuing Overdraft Fee (previously a $30 fee was charged when an account remained overdrawn more than $5 for seven consecutive days);
• Eliminate NSF fees for items that are returned unpaid because of non-sufficient funds;
• Reduce the fee by more than 20% for an NSF item that is paid; and
• Increase the “overdraft cushion” amount from $5 to $30. Previously, no fees were charged if an account was overdrawn $5 or less at the end of the day. Going forward, accounts will not be assessed an NSF fee when overdrawn $30 or less.
These updated overdraft practices will have many advantages for clients. It is estimated that Zions Bank will save its clients nearly $7.4 million in fees annually, while helping them better manage their overdraft experiences. It is estimated that more than 60,000 Zions Bank client accounts will benefit from these changes.
Overdraft protection is designed to help consumers cover a charge when their bank account dips below zero — saving them the inconvenience and embarrassment of a rejected payment. Overdrafts can lead to challenges such as point-of-sale declined purchases and a lack of access to short-term credit to bridge unexpected shortfalls.
According to a recently released Morning Consult study conducted on behalf of the American Bankers Association, 89% of consumers say they find their financial institution’s overdraft protection valuable, and three in four consumers said they are glad their bank covered their overdraft payment, rather than returning or declining the item. Additionally, 61% of consumers think it is reasonable for financial institutions to charge a fee for an overdraft.
However, for some low-income households, overdraft fees can be a major hurdle to having a bank account. Zions Bank is among a growing number of financial institutions working to address the needs of consumers who may have difficulty paying for traditional banking services.
“We believe that making these adjustments to our overdraft policies and fees will help us build better pathways to inclusion for those members of our community who currently are unbanked or underbanked due to concerns about overdraft fees in traditional financial institutions,” said Scott Anderson, president and CEO of Zions Bank.
Another Zions Bank resource to help clients manage their finances is OnBudget Banking, a no-overdraft-fee bank account that has received Bank On certification from the Cities for Financial Empowerment Fund. OnBudget Banking helps clients stay on track with their financial goals with a predictable monthly service fee of $5, mobile banking and no overdraft fees. The checkless account offers a Visa® debit card for making payments and accessing funds. The national Bank On certification recognizes that the account meets standards around affordability and functionality created by consumer advocates, nonprofit organizations and civic leaders.
“Removing roadblocks for consumers who have historically been priced out of the banking system is an important step in our efforts to promote economic inclusion,” said Anderson. “With lower NSF fees and access to a basic deposit account such as OnBudget Banking, individuals and families can avoid costly alternatives like payday lenders and check-cashing services, which may leave them stuck in a cycle of debt.”
An estimated 5% of U.S. households are unbanked, meaning no one in the household has a checking or savings account, while another 11% are underbanked, lacking sufficient access to mainstream financial services, according to the FDIC. The FDIC survey also reveals racial disparity between bank account holders. Nationally, 48% of Black households and 42% of Hispanic households are unbanked or underbanked, compared to less than 14% of white households.