Huntington Bancshares on Tuesday announced several measures designed to help struggling consumers, including the decision to reduce the price of overdraft fees by around 60%.
In April, the company with $174 billion in assets plans to implement a feature that will provide instant access to up to $500 in check deposits. It also plans to cut overdraft fees from $36 to $15 in July.
Additionally, the Columbus, Ohio-based bank will lower the fees it charges when a transaction is rejected because the customer does not have sufficient funds – also from $36 to $15.
The reduction in overdraft fees will cost the Columbus, Ohio-based bank about $14 million per quarter, but it will more than pay for itself over time, Chief Executive Officer Steve Steinour said Tuesday. Huntington reported $372 million in service charges on deposit accounts last year.
“In a few years, we’re going to get that back – new customers, less attrition, more business,” Steinour said in an interview. “There are short-term difficulties or challenges with some of the decisions we have made, but we believe they are in the long-term best interests of our customers and therefore our shareholders.”
Across the banking industry, revenue from overdraft fees, which was $17.2 billion in 2019, fell to around $10.5 billion in 2020, as banks reduced or reduced fees. having given up during the pandemic, and consumers teeming with cash from government stimulus payments.
A recent study by the Pew Charitable Trust said overdraft income is expected to fall by a further $2 billion as a number of large regional banks have announced plans reduce the penalties they impose on customers for overspending.
Many banks are changing their overdraft policies in the era of Biden regulators pressure industry to reduce the burden that fees place on consumers.
Huntington began liberalizing its retail banking policies in 2010, with the introduction of a feature that offered 24 hours to remedy an overdraft before a fee was charged. Huntington extended Grace’s 24-hour service to business customers in 2020 and established a $50 “safe zone” in which no overdraft fees are charged.
Last summer, Huntington launched Early Pay, which allows customers with access to direct deposit their paychecks up to two days early.
This too deployment of Standby Cash, offering interest-free lines of credit of up to $1,000 if customers agree to repay in three monthly installments withdrawn automatically from their accounts. Last year, Steinour estimated that Standby Cash would cost Huntington $1 million a month, but said the bank plans to recoup most of that by attracting new customers and building loyalty with existing customers.
On Tuesday, Steinour said Standby Cash has been “hugely embraced” by depositors and bankers in Huntington. “You always hear about people being exploited. It’s the exact opposite,” he said.
According to Steinour, the early access feature slated for release next month is intended to help customers who live paycheck to paycheck. “Things like depositing a check and getting money back are very important,” he said.
By charging $15 for an overdraft, Huntington will adopt the price recently set by M&T Bank in Buffalo, New York. Some other banks have gone further, lowering the price to $10 Where completely eliminating fees.