Bank of America Corp. is all set to announce that it is eliminating the overdraft fees for its debit card customers. Currently the fee stands at around $35.

The bank took this step to keep itself one step ahead of new regulations by the Federal Reserve that restricts such charges. Federal Reserve has set the new rules to ban the banks from charging such fees without taking permission from the customers. The new rules will be effective from July 1.

With the announcement, now the 37 million debit card customers of Bank of America can not spend more than the amount they have in the bank accounts related to their debit cards. All transactions carried out by their card will be denied if the amount payable exceeds the account balance and the customer is not under the overdraft protection service. In case ATM withdrawals also the customer can draw an amount more his balance only if he agrees to pay an overdraft fee of $35.

The bank plans to impose the new policy by June19 for its new customers and in August for its existing debit card holders.

However, the overdraft fees at present are considered as an important source of revenue for banking institutions and it will have a negative impact on the revenues of the banking institutions. In 2009, revenue generated by these charges was estimated to be $38.5 billion.