Dive Brief:
- New York Community Bank (NYCB) and Flagstar Bank will eliminate nonsufficient fund (NSF) fees Aug. 1, the banks said Monday in separate press releases.
- The banks will adopt several other changes to their overdraft policies on that date, including eliminating overdraft transfer fees between linked accounts, but they will not go so far as some firms to scrap overdraft entirely.
- NYCB and Flagstar announced in October 2021 they would merge in an all-stock deal valued at $2.6 billion, though the tie-up is now in regulatory limbo as the firms navigate the national bank charter process.
Dive Insight:
NYCB will eliminate nonsufficient, uncollected and unavailable funds fees on all of its consumer and business checking accounts, and get rid of transfer fees on its overdraft shield product.
The Westbury, New York-based bank also plans to roll out an early wage access offering in the third quarter called Early Pay, which will provide customers with access to their direct deposit paychecks up to two days sooner.
"The Bank remains committed to its customer-first philosophy," Thomas Cangemi, the bank’s CEO, said in the press release. "The elimination of these fees and the introduction of Early Pay is another step in helping our customers better manage their finances.”
NYCB’s merger target Flagstar, in turn, announced it would eliminate NSF, consecutive days overdraft and overdraft protection transfer fees, as well as limit overdraft charges to three per day (down from five) and to transactions exceeding $10 (up from $5).
"Our new program brings lots of options to make it easier for people to stay on a sound financial footing,” Anne Bertelsen, Flagstar's head of retail banking, said in a statement.
Flagstar charges customers a $36 NSF fee when they initiate a transaction greater than $5 without sufficient funds in their account and the bank rejects the payment.
In eliminating NSF and select overdraft fees, NYCB and Flagstar are tracking with the industry trend of pivoting away from punitive fee-based models. Citi became the largest firm in the U.S. to do away with overdraft fees in February, taking the title from Capital One, which scrapped overdraft fees in December.
NYCB and Flagstar extended their merger timeline in April as the firms switched from securing a state to national charter for the combined entity.
Flagstar that month announced it laid off 20% of its mortgage staff, or 420 employees, because of declining loan volume. After the NYCB-Flagstar deal closes, Flagstar will maintain its brand in the Midwest.
