Regions Bank latest to change overdraft policy

BIRMINGHAM, Ala. — Regions Bank on Thursday became the latest bank to ease its overdraft fees and policies, as federal scrutiny intensifies over the programs.

However, the Alabama-based company said it will continue automatically enrolling customers for overdraft protection — the key practice that has come under fire in recent months.

Last week, Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo said they would no longer automatically enroll customers for overdraft protection.

Consumer advocates say automatic enrollment is misleading because most people assume they can’t spend more than they have with debit cards, so they might not realize they’re overdrawing their accounts when transactions are approved. They also might not realize steep penalty fees for doing so are piling up, advocates say.

Regions Bank pointed out that its customers can already opt out of overdraft protection, which has not been the case at some of the nation’s largest banks.

Regions also said it will no longer charge a fee when customers overdraw their accounts by less than $5. The fees will also be capped at four per day. The changes go into effect in the first quarter of 2010.

The turnaround on automatic enrollment by several of the country’s biggest banks last week came after Sen. Chris Dodd, D-Conn., said he planned to introduce legislation that would bar banks from automatically signing customers up for the programs.

Regions serves customers in 16 states across the South, Midwest and Texas.

Shares of Regions Financial Corp., the parent of Regions Bank, slipped 10 cents to $6.11 in afternoon trading.