Regions Financial in Birmingham, Alabama, is the latest bank to offer a checking account promising no overdraft fees.
The new account, dubbed Regions Now Checking, charges a $5 monthly fee and can be linked to other Regions accounts for fee-free overdraft protection.
The $156 billion-asset company said Thursday that the account has been certified by the Cities for Financial Empowerment Fund as meeting its Bank On standards, meaning that it complies with certain affordability criteria for low-income people.
“We’re here to meet people where they are and help them get to where they want to be in terms of reaching their financial goals,” Scott Peters, Regions’ head of consumer banking, said in a press release.
In recent months, a number of large and mid-sized banks have announced new products or policy changes intended to make it easier for consumers to avoid overdraft fees.
Ally Financial completely eliminated the fees, and Cullen/Frost Bankers in San Antonio said it would stop charging overdraft fees on transactions up to $100 for customers who have a monthly direct deposit of at least $500. PNC Financial Services Group in Pittsburgh launched a feature called Low Cash Mode, which alerts customers when their balance is about to go negative and gives them 24 hours to avoid a fee.
Earlier this year, Regions executives previewed their plan to launch the Bank On-certified account, while also saying that the bank was
Specifically, Regions has said that debits, payments and withdrawals will generally be processed in the order in which they are made, regardless of whether the customer pays by check, debit card, wire or another method. The practice of reordering transactions has drawn criticism from consumer advocates.
Regions has historically relied more heavily on overdraft fee revenue than most of its competitors.
In 2019, 17.7% of Regions’ noninterest income came from fees for overdrafts and from customers who had insufficient funds, according to a report last year by the Center for Responsible Lending. For all banks with at least $1 billion of assets that provided data to regulators, 5.0% of noninterest income came from such fees in 2019.
Regions executives said in June that overdraft fee revenue had declined during the pandemic — in large part thanks to government stimulus programs — and that they did not expect that revenue to return.
In addition to charging no overdraft fees, Bank On-certified accounts must carry a minimum opening deposit of $25 or less and offer a free debit card, free bill pay and unrestricted branch and ATM access within the bank’s network. Some 140 Bank On-certified accounts are available at U.S. banks and credit unions, according to the Bank On website.
“This account offers consumers in the Southeast, Midwest and Texas who are looking to improve their finances a safe, affordable, and truly useful mainstream banking product,” Jonathan Mintz, president and CEO of the nonprofit Cities for Financial Empowerment Fund, said in the press release. “This is especially important during COVID-19, as consumers need to access and manage their money both affordably and safely.”
