TD to cut overdraft fees for US bank customers despite political pressure
The U.S. branch of the Toronto-Dominion Bank is eliminating fees for overdrafts of US$50 or less after several competitors revised their own fee structures in the face of political pressure.
TD will also offer US customers who overdraw their account by more than US$50 a 24-hour window to restore a positive balance and avoid fees, and send alerts when account balances are low. the bank said on Tuesday.
While the changes make TD’s U.S. overdraft structure more customer-friendly, they could also hurt the Toronto-based bank’s profits. Overdraft fees accounted for about 5.5% of TD’s U.S. banking revenue in 2021, or nearly US$477 million, according to regulatory filings.
“Competitive moves to eliminate or reduce overdraft fees present a clear risk to an important revenue stream for TD,” said National Bank Financial Inc. analyst Gabriel Dechaine in a note to clients this month. last.
In recent months, competitors have taken aggressive steps to adjust their own overdraft fees. Ally Financial and Capital One Financial eliminated fees altogether, JPMorgan promised to give customers a day to restore their account balances, and Bank of America reduced its overdraft fees.
Some US lawmakers, including prominent Democratic Senator Elizabeth Warren, have sharply criticized overdraft fees charged by US banks and urged regulators to more aggressively monitor overdraft practices.
TD has made other changes to its U.S. overdraft policies, including reducing the number of times a customer could be charged a US$35 overdraft fee. And last fall, the bank introduced a new non-discoverable account, which now accounts for about 10% of the bank’s newly opened accounts, or nearly 40,000 accounts to date.
“We listen to our customers,” Matt Boss, TD’s U.S. head of consumer products, said in a statement. “These enhancements are designed to give customers more control over their finances.”
In Canada, TD charges a lower fee of $5 per overdraft plus interest on overdraft amounts, and offers a $5 per month protection plan that allows customers to be overdrawn as many times as they want. wish.
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