Say goodbye to overdraft fees. That s the message Bank of America (BAC) sent today with an announcement that it will eliminate $35 overdraft fees on debit card transactions one of the most lucrative type of fees for the industry and a major source of revenues.

Overdraft fees have been roundly criticized by consumer advocates for socking customers with $35-$40 charges just to buy a $2 cup of coffee. And Bank of America is getting ahead of new rules aimed at sharply limiting banks ability to charge such fees. Under the new policy, issued by the Federal Reserve, banks won t be able to charge overdraft fees unless consumers opt in for overdraft protection. And that could have a big impact on the bottom line. Banks and credit union earned $23.7 billion in overdraft fees in 2008, according to the Center for Responsible Lending. Such fee income has been steadily rising as Americans have used debit cards for more everyday purchases. And the industry could lose an estimated $15 billion a year in revenues once the new rules go into effect, according to Aaron Fine, an industry consultant with the firm Oliver Wyman.

As for Bank of America, analysts say the bank could lose hundreds of millions in income by eliminating the fees. Consumers will still be able to overdraw their accounts at an ATM machine, with a warning that they ll have to pay an overdraft fee. But debit-card purchases account for around 60% of overdrafts at the bank, the bank says. And overdraft fee income fell by $160 million in the fourth quarter of 2009, after the bank limited the number of fees that a consumer could rack up in a single day.

This article is an excerpt from our Early Bird markets story, which was originally published the morning of March 10.