JPMorgan Chase & Co.
(
JPM
) is set to drop overdraft fees on debit card transactions of $5 or
less, effective next month. Currently, the company charges $34 per
purchase, irrespective of the size of transaction. With
implementation of this change, customers will be relieved of paying
fees on smaller transactions.
The decision to scrap fees stems from the lawsuit settlement
that cost JPMorgan $110 million in damages. Infuriated customers,
who condemned the bank's dubious ways of overcharging overdraft
fees, had filed this class action lawsuit. The bank's
decision to nullify overdraft fees seems to be a measure to work
upon its dented goodwill.
JPMorgan and several other major banks like
Commerce Bancshares Inc
(
CBSH
) and
Bank of America Corporation
(
BAC
) were accused of reordering transactions from largest to the
smallest, causing the balances to deplete faster. This made
customers vulnerable to excessive fees. It caused a nationwide
uproar, and the customers filed various lawsuits demanding
compensation. It also necessitated regulatory authorities to take
measures against banks' unwarranted activities.
Earlier this year, JPMorgan had reduced its overdraft protection
transfer fee from $12 to $10. Also, the fee charged for stop
payment was lowered to $30 from $34. In addition to this, if
stop-payment is appealed via phone or online, the bank will charge
$25 instead of $27. All of these measures have placed JPMorgan
apart from the rest of the banking giants, which have resorted to
fee hikes.
Some banks, like
Fifth Third Bancorp
(
FITB
) and
U.S. Bancorp
(
USB
), are set to increase the overdraft fees considerably.
Wells Fargo & Company
(
WFC
) has introduced a monthly checking fee of $7. According to a
survey conducted by Consumer Federation of America, many more
banking institutions are about to follow this trend. This will come
as a major setback for customers, who are reeling under high
fees.
Conclusion
Of late, JPMorgan has been in the news for the all wrong
reasons. Lawsuits, losses and the recent downgrade of credit rating
by Moody's all dealt blows to the banking giant. Therefore, the
action to reduce various fees can be counted as a plan to improve
public relations by the bank.
Currently, JPMorgan retains a Zacks #4 Rank, which translates
into a short-term Sell rating. Considering the fundamentals, we
maintain our long-term Neutral recommendation on the stock.
BANK OF AMER CP (BAC): Free Stock Analysis
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COMMERCE BANCSH (CBSH): Free Stock Analysis
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FIFTH THIRD BK (FITB): Free Stock Analysis
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JPMORGAN CHASE (JPM): Free Stock Analysis
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US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
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