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Capital One latest bank to eliminate overdraft fees

Capital One said it will still allow customers to overdraft, but it will no longer charge a fee to do so.

Capital One said Wednesday that it will get rid of all overdraft and non-sufficient funds fees, the latest bank to do so this year and one of the largest financial institutions to shy away from the long-hated practice. The Virginia-based bank said it will still allow customers to overdraft, but it will no longer charge a fee to do so.

Any eligible customers can opt into fee-free overdraft at any time, the bank said. Capital One CEO Richard Fairbank said the move was part of the company's effort to bring simplicity and humanity back to banking.

“The bank account is a cornerstone of a person’s financial life,“ Fairbank said in a statement. “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."

Other banks have made similar announcements this year including Ally Bank and PNC, the Associated Press reported.

The announcement came on the same day the Consumer Financial Protection Bureau announced that overdraft and non-sufficient funds fees made up two-thirds of reported fee revenue for the banking industry -- an estimated $15.47 billion in 2019.

Bank of America, JPMorgan Chase and Wells Fargo made up 44% of the 2019 fee revenue, CFPB said in a statement.

“Rather than competing on quality service and attractive interest rates, many banks have become hooked on overdraft fees to feed their profit model,” CFPB Director Rohit Chopra said. “We will be taking action to restore meaningful competition to this market.”