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KeyCorp (KEY) Announces Changes in NSF and Overdraft Fees

Zacks Equity Research
·3 min read

The changes announced by KeyCorp KEY earlier this year regarding its non-sufficient fund (NSF) fees and overdraft fees have come into effect. The bank announced that the new terms went into effect for consumer and small business checking and savings accounts starting Sep 16, 2022.

This April, KeyCorp announced the plan to eliminate NSF fees and reduce overdraft fees.

According to the latest announcement, the following changes have been implemented.

There is a Key Coverage Zone, which means that client accounts overdrawn by $20 or less at the end of the day will not be charged overdraft fees. Charges for NSF fees have been eliminated. Further, the $0 overdraft protection transfer fee is being expanded to include transfers from eligible credit products.

The overdraft charges outside the Key Coverage Zone and the recurring overdraft fees are now $20. The maximum number of transactions that would incur overdraft charges has been reduced from 5 to 3 at the end of each day.

The updates are meant to offer clients more flexibility and convenience, and help them stress less about their finances. The changes complement the bank’s current tools aimed at helping clients make financial progress, including Key Secured Credit Card, KeyBank Loan Assist and the KeyBank Hassle-Free Account.

Daniel Brown, the director of consumer product management at KEY, stated, “We took time and care listening to our clients’ feedback and studying industry best practices to develop this program. We know that unexpected overdrafts can happen and are proud to introduce Key Coverage Zone as a safety net for our clients. In addition, eliminating NSF fees, along with our other overdraft enhancements, serves as the next step in creating greater flexibility for our clients.”

He added, “We’re excited to take the next steps in making banking easier - and better. We’re a relationship bank and strive continually to enhance our programs to deliver the superior products and services that our clients deserve.”

So far this year, shares of KEY have lost 22.9% compared with the 20% decline of the industry.

 

Zacks Investment Research
Zacks Investment Research


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Currently, KeyCorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our Take

Of late, banks have been facing increased scrutiny from regulators and lawmakers for charging overdraft and other fees to consumers. Several U.S. consumer banks have been asked to eliminate all consumer overdraft fees to safeguard customers.

Similar to KEY, banks like Bank of America BAC and Citigroup C have stopped charging NSF and overdraft fees.

In January 2022, Bank of America announced changes to its overdraft services, including plans to do away with NSF fees, effective February, and lower overdraft fees to $10 from $35, beginning in May. The company also removed transfer fees associated with its Balance Connect for overdraft protection service in May.

Since 2010, BAC has taken several steps to “empower its consumer and small business clients to bank with greater confidence and reduce overdraft usage.” The efforts have substantially lowered fees related to overdrafts. Such steps, beside SafeBalance accounts with no overdraft fees and Balance Assist, will reduce overdraft fee revenues by 97% from the 2009 levels.

In February, Citigroup announced that it would completely terminate overdraft fees, return item fees and overdraft protection fees by this summer, making it the largest U.S. lender to do so.

Citigroup’s overdraft fee collection has been among the lowest compared with its peers. Other than a consumer-friendly overdraft policy, the banking giant continues to expand access to banking products and services, making banking more financially inclusive for underserved communities.


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