Cape Cod 5's Welfleet branch. Banker & Tradesman file photo
Cape Cod 5 plans to eliminate all fees for consumer and business overdrafts, as well as nonsufficient funds, in a move that matches or goes beyond the steps several national banks have taken to address the effects these fees have on consumers.
The Hyannis-based bank said in a statement yesterday that it would eliminate fees associated with insufficient funds, uncollected funds and savings transfers to cover overdrafts. The changes take effect on June 1.
“This is the latest action taken by the bank in carrying out its mission of enriching lives and its commitment to supporting the financial well-being of its customers,” the bank said in a statement
Cape Cod 5 said it had temporarily waived several consumer fees in 2020 because of the burden these fees placed on individuals experiencing financial hardships due to the COVID-19 pandemic.
“The step of eliminating these fees entirely demonstrates the bank’s commitment to serving as a trusted financial partner within the communities it serves and providing fair and appropriate banking products and services to residents of the region,” the bank said.
Banks have faced growing criticism from the Consumer Financial Protection Bureau, consumer advocates and lawmakers over the effects of overdraft fees on low- and moderate-income consumers.
Several large banks over the past year have changed their policies for overdrafts and insufficient funds to help customers avoid the fees. Capital One announced in December it would eliminate fees for overdraft and insufficient funds, the first bank among the nation’s 10 largest to eliminate the fees. Citibank also plans to eliminate fees.
Other banks have taken steps to help customers avoid fees without completely eliminating them. Bank of America in January announced it would eliminate nonsufficient funds fees and reduce overdraft fees. M&T Bank, which will enter the Massachusetts market once the People’s United Bank conversion is complete, said in February it would reduce its overdraft fee and limit its assessment to once per day. M&T also plans to eliminate nonsufficient funds fee and overdraft protection transfer charges.
Santander has increased the threshold for charging overdraft fees, and Citizens Bank gives customers a grace period to address overdrafts before a fee is charged. PNC last year created a tool to give customers time to address overdrafts.
In a study released last year, the CFPB said smaller institutions bring in as much income per account from overdraft fees as larger institutions.
“As a community bank, Cape Cod 5 works every day to help individuals and families reach their financial goals wherever they may be on their financial journey,” Dorothy Savarese, chair and CEO of Cape Cod 5, said in the statement. “The elimination of all fees associated with overdrafts aligns with the bank’s values and demonstrates another way that Cape Cod 5 is leading the way in meeting the financial needs and supporting our customers and community members.”
Cape Cod 5 will also join the growing list of banks and credit unions offering a product that has been certified as meeting national Bank On standards to help give unbanked and underbanked individuals access to low-cost financial products. The bank said it would launch its BankOn personal checking account in June.
“The CC5 BankOn account, coupled with the elimination of overdraft fees for all customers as well as our ongoing commitment to providing accessible financial know-how resources, are all part of Cape Cod 5’s ongoing efforts to better serve and meet the needs of all members of our communities,” Savarese said.
