Dive Brief:
- M&T Bank will reduce its overdraft fee from $36 to $15, the company said Tuesday in a press release.
- The Buffalo, New York-based bank also plans to eliminate non-sufficient fund (NSF) fees and charges for overdraft protection transfers from linked deposit accounts.
- The changes will take effect during the second quarter of 2022, the bank said.
Dive Insight:
M&T has become the latest in a series of banks to scale back overdraft and related fees.
The announcement by M&T mirrors moves made by Bank of America last month to reduce the cost of overdraft from $35 to $10, and eliminate NSF and certain transfer fees.
In recent weeks, U.S. Bank, Truist and TD have all announced plans to curtail punitive fees levied against customers in one form or another.
In addition to reducing the cost of overdraft and eliminating NSF and transfer fees, M&T also plans to limit its number of fee assessments to once per day.
"Financial wellness is a critical component to the quality of one's life," Chris Kay, the bank's head of consumer banking, business banking and marketing, said in the press release. "The enhancements we're making today, along with those we've made previously, make our banking services more accessible and give our customers more choice and flexibility in managing their finances — especially during challenging times.”
The revenue M&T derived from service charges on deposit accounts increased by 8% between the end of 2020 and 2021, the bank said in its latest earnings report.
Although cutting back overdraft will stymie M&T’s service-fee revenue stream, the policy changes may also serve to retain and attract customers.
As a growing number of banks eschew punitive fees and customers gain access to an increased supply of low-cost banking services, it is more challenging for firms reliant on overdraft and related fees to prevent customers from switching banks. A study by J.D. Power published in January found that customers are twice as likely to switch banks if they’ve been charged any kind of fee.
M&T will provide customers with more specific information about the planned changes to its fee policies in the coming weeks, it said Tuesday.
