James Allen News Center

Good news! Bank of America customers will soon be able to spend more money than they have in their accounts without paying unpredictable overdraft fees. Bank of America`s policy may be a fundamental step in getting other banks on board in the near future.

So what happens if you want to buy a gorgeous engagement ring on your debit card, but you don`t have enough money in the bank to cover it? Simple, the transaction won`t go through. If you try to withdraw more funds than you actually have from an ATM, you`ll have to agree to pay a $35 overdraft fee before you can get the money.

Beginning July 1, rules set by the Federal Reserve will ban banks from charging overdraft fees without first getting permission from the customer.

"The majority of our customers who overdraw their account do so with everyday debit purchases," says Susan Faulkner, senior vice president of consumer banking for Charlotte, N.C.-based Bank of America. "They're doing this unknowingly, because they aren't aware that they are about to overdraft."

The bank's new policy will start on June 19 for new accounts, and in early August for existing accounts. It will replace the bank's current terms, which charges a fee if the deficit is greater than $10.

This change will cut into the more than $1.77 billion annual revenue that overdraft fees make for the banking industry. Interestingly enough, 93 percent of overdraft fees are generated by just 14 % of customers.