Banks adding fees to counter losses from overdraft rules

American consumers are saving millions of dollars each day on bank overdraft charges since new rules took effect in August, according to quarterly earnings reports released this week.

But savings for customers are lost revenue for banks, and banks are devising ways to compensate. A no-strings-attached free checking account, for example, could become a thing of the past.

Banks have lost significant revenue since Aug. 15, when the rules took effect: $364 million at Bank of America Corp., $380 million at Wells Fargo & Co., $44 million at PNC Bank, and $400,000 to $500,000 a month at Fulton Financial Corp., which operates Fulton Bank in Philadelphia's Pennsylvania suburbs and The Bank in South Jersey.

The overall U.S. banking industry is forecast to bring in $35.4 billion from overdraft fees this year, down from $37.1 billion in 2009, according to Moebs Services, which gathers data about bank pricing.

The new federal rules require banks to get customers to choose automatic overdraft protection before applying it when a debit card is used for small purchases.

One of the goals was to prevent consumers from being charged repeatedly with $35 fees if they did not have enough money in their account to cover a sandwich at McDonald's and then a coffee at Dunkin' Donuts.

Bank of America, which has 115 branches in the Philadelphia region, discontinued overdraft charges on such small debit-card transactions - even though they accounted for more than half the bank's overdraft fees.

To cut costs and regain some of that revenue, Bank of America, based in Charlotte, N.C., in August introduced a checking account that has no monthly fee for online banking and electronic statements. But customers who want to use a teller confront an $8.95 monthly fee.

The bank also started giving customers the option of getting more cash out of an ATM than they have in their account - for a $35 fee.

At Wells Fargo, which owns Wachovia Bank, the $380 million decline in revenue from the new overdraft rules "was before any actions that we may take to offset this in coming quarters in terms of pricing, product changes," chief financial officer Howard I. Atkins said in a conference call Wednesday.

Wachovia customers have seen new fees and fee increases, but those stemmed from the adoption of Wells Fargo policies, not the new regulations, spokeswoman Barbara Nate said.

Changes in July include a $2 monthly fee to receive images of cleared checks, an increase to $10 from $5 for an overdraft protection transfer from savings, an increase to $12 from $10 for the charge-back fee on a bad check, and a $5.95 monthly fee to access an account through Quicken or Microsoft Money software, Nate said.

Fulton Financial, of Lancaster, said that when it reaches customers on the phone to talk to them about overdraft protection, 90 percent choose to keep it rather than be denied a purchase.

Still, the annual revenue loss was estimated at $4.9 million by E. Philip Wenger, the bank's president and chief operating officer.

The bank has a three-phase plan to recoup that money, and then some, if necessary. Fulton declined to provide details, but it said the first phase had been implemented, with an annual revenue boost of $1 million.