Capital One customers will no longer be subject to overdraft fees and non-sufficient funds fees.
The company announced Wednesday that transactions that would have overdrawn an account will be declined and no fees will be assessed.
“The bank account is a cornerstone of a person’s financial life,“ said Richard Fairbank, Capital One’s Founder and CEO. “It is how people receive their paycheck, pay their bills and manage their finances. Overdraft protection is a valuable and convenient feature and can be an important safety net for families. We are excited to offer this service for free.”
Capital One, which will implement the policy in 2022, becomes the first major bank to eliminate overdraft fees.
Forbes reportsthat banks made more than $12 billion in 2020 from overdraft fees.
Consumer advocates have long pressed banks to eliminate overdraft fees, which they say targeted people who were already short of money.
Sen. Elizabeth Warren, a vocal critic of big banks and overdraft fees, called Capital One's new policy a "good move." She also said other big banks should follow Capital One's lead.