Wells Fargo unveiled a new bank account with no overdraft charge Tuesday, ahead of time. The Simple Access Banking account is one of two limited-overdraft-fee items unveiled in March by the country's fourth-largest bank, which authentically said it would be available in early 2021. The introduction of the checkless account is part of a huge move Wells Fargo has made to improve its goods and services and removes two current accounts, Teen Checking, and Incentive Checking, said Erin Constantine, the head of consumer deposits for consumer and small business banking at Wells Fargo. The account has a monthly payment of $5 which, is forgiven for primary account owners under 25 years of age. "When we decided that we were going to try to deliver for our customers this year, everything started falling into place," Constantine said. "We're excited that we were able to launch this so much quicker than we had originally anticipated.”
The introduction of a no-overdraft-fee account by Wells Fargo comes when policymakers have called for banks to abolish overdraft fees in the pandemic of coronavirus. In March, Senators Cory Booker, D-N.J., and Sherrod Brown, D-Ohio, proposed a bill banning financial institutions from charging overdraft fees until the crisis is over.
Wells Fargo is now trying to restore its reputation after the systematic customer fraud first came to light in 2016, resulting from the fraudulent accounts fiasco. The overdraft activities of the lender came under criticism last year after a New York Times study exposed a scheme that permitted bank accounts to stay open long after borrowers believed they had closed them, causing some consumers to be paid thousands of dollars in overdraft fees. Wells Fargo's latest account may be an effort to convince the public that it is introducing meaningful reform in a banking process which policymakers and consumer advocates frequently oppose.
"The fast pace of the improvements we're making is evident in our rollout of Clear Access Banking, well ahead of our original target date of early next year," Ed Kadletz, head of Wells Fargo's deposit products group for consumer and small business banking said in a statement. "These updates are supporting Wells Fargo's larger transformation and focus on earning trust and building lifelong relationships with our customers.” Banks with deposits of $1 billion or more take in overdraft payments of $11.7 billion in 2019, according to the Centre for Responsible Lending.
Banks have introduced measures to help customers survive the coronavirus pandemic in response to the pandemic and after demands from regulators, including waiving overdraft fees.
The lender joins other major institutions such as Bank of America and Citi, who have had no-overdraft accounts since 2014, with the opening of Wells Fargo's Direct Access Banking accounts. Fifth Third Bank, which launched its Express Banking account in 2016, and JPMorgan Chase, which launched Chase Safe last year, are two major banks with no-overdraft charge accounts. "We're definitely anticipating that we will bring new customers to Wells Fargo, having a simple, straightforward account like this with a low monthly service fee and no overdraft," Constantine said. "It's certainly something that a lot of customers are looking for.”
Challenger banks also took no-overdraft deals on board. Chime's SpotMe functionality protects users who surpass the amount of their account by as much as $100, while Varo Money, who recently received their national bank charter protects transfers up to $50 above the account balance of a person.
Varo reports that over the last year it has saved consumers more than $100 million in overdraft fees.