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Bank of America drops overdraft fees on debit purchases

http://66.225.205.104/JR20100310b.mp3

Bank of America customers won't have to pay overdraft fees on debit card transactions this summer. Instead, they'll just be turned down at the register. Bank of America CEO Brian Moynihan told investment bankers at a conference in New York today that the $35 cup of coffee is gone. And no, he wasn't referring to some incredibly exotic brew. What he meant the unpleasant surprise customers have when they use a debit card to buy their coffee, and they don't have enough money in the bank to pay for it. Until now, Bank of America just let the sale go through and slapped the customer with a hefty fee. Come June, Moynihan says, "No more." "So when a person goes in and buys a $2 cup of coffee - if they don't have the money, they're not gonna get the product," said Moynihan at the Citi 2010 Financial Services Conference on Wednesday. Bank of America says it's the biggest bank to eliminate the fees so far, and it will probably prompt others to follow suit. Moynihan says Bank of America's customers asked for the change. But the bank's investors didn't. According to one estimate, overdraft fees on debit cards and ATM transactions raised $20 billion for U.S. banks last year. "That gives up a lot of revenue - and you and your colleagues have every right to say 'How are you gonna make that up?'" Moynihan told investors. "But the policy decision - and our decision - is that's a fair way to go about it." Moynihan said Bank of America will actually save some money by not having to chase down customers to collect the overdraft fees. But he also said the bank will make up the losses through quote "product design." And in finance-speak, that's usually code for "higher fees on other products like checking accounts."