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Capital One Ends its Overdraft, Non-Sufficient Fund Fees

Overdraft fees can be $25 to $35 a pop. The step will cost Capital One $150 million in revenue annually, the company said.
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Capital One Financial  (COF) - Get Capital One Financial Corporation Report announced Wednesday that it’s ending overdraft and non-sufficient fund (NSF) fees for its consumer banking customers.

The bank said it’s the country’s sixth largest retail bank and represents the only one of the top 10 to make this move. Overdraft fees can run between $25 and $35 a pop. The step will cost the bank $150 million in revenue annually, a company spokesperson told CNBC.

The stock recently traded at $143.54, up 2%. It has surged 45% so far this year, as the banking sector has benefited from economic recovery. But the stock has slid 14% in the last three months.

Capital One will still offer its overdraft protection for customers who want it. “All customers currently enrolled in overdraft protection will be automatically converted to no-fee overdraft on the launch date in early 2022,” Capital One said.

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“Eligible customers who are not currently enrolled can enroll at any time. For customers not enrolled, transactions that would overdraw an account will be declined and no fees will be assessed.

"Capital One’s complete elimination of overdraft and NSF fees is a landmark moment for American families," Lauren Saunders, associate director at the National Consumer Law Center, said in a statement furnished by the bank.

Morningstar analyst Eric Compton puts fair value at $138 for Capital One shares.

“Narrow-moat Capital One reported a strong third quarter, as good loan growth, net interest margin expansion, and low credit costs combined to drive impressive results,” he wrote in a commentary Oct. 26.