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JPMorgan Chase reduces bank overdraft fees in bid for customers -Breaking

© Reuters.

By David Henry

NEW YORK (Reuters) – JPMorgan Chase & Co (NYSE:) will give customers more leeway on overdrafts before charging fees, giving up revenue in a bid to keep up with competitors and attract customers, it said on Wednesday.

It will offer customers an opportunity to replenish overdrawn balances within one day and allow them to withdraw funds directly from paychecks, two days earlier than usual.

Jenn Piepszak co-CEO for the Chase segment at JPMorgan said the moves will impact bank revenue along with the August changes. However, she declined to provide more detail in an interview.

JPMorgan makes the announcement after Capital One Financial Corp (NYSE-:) stated last week that accounts will no longer be charged for funds not sufficient to cover drafts. The practice was criticized by Washington’s Consumer Financial Protection Bureau.

According to analysts’ estimates, about 1% has come from JPMorgan overdraft charges. This is despite the fact that they have been asking more banks to cut these fees due to public pressure.

To make things better, the banks have been revising their rules for overdrafts.

Piepszak stated that “we believe this set is puts us in an leadership position competitively.”

JPMorgan will charge customers fees for advance funds on transactions with overdrawn amounts that are greater than its limits, as long as the customers agree to pay the fee and believe the bank will reimburse them.

Piepszak indicated that JPMorgan could remove all fees from all overdrafts. However, this would require clients to bounce additional checks.

Capital One announced that they will pay overdraft fees free to those with a steady deposit record and aren’t in excess of their limit.

Piepszak said that bankers have observed that many customers will knowingly overdraw their accounts to avoid paying fees.

JPMorgan began to ease up its fees in August. JPMorgan eliminated bounced check fees and allowed customers to exceed their accounts by $50, before charging for the transaction.

JPMorgan used to cover about 90% of all overdraft transactions received, and charge fees on approximately two-thirds. Piepszak explained that only half now have to pay fees.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.