On banks making a killing with overdraft fees

[tk149]

Originally posted by: Athena
Two points:

What I would expect is that with a debit card, the transaction would be declined. Given that it's all automatic, with no manual involvement whatsoever, there should be no fee, just a rejected transaction. It turns out though, that the default arrangement for a debit card is to put the customer in an overdraft position -- so that the customer won't be embarassed by being told that he doesn't have the money to buy that crappy whatever that he really didn't need. And if you do request that it be changed, you'll be told that the overdraft fee will be assessed even if the transaction is declined.

As you rightly point out, an overdraft is essentially an unsecured loan...so why the double hit each time? Why do customers end up paying a $20-$35 "loan origination fee" plus elevated interest charges? Why not just charge a flat origination fee to open an unsecured line of credit then charge interest as it is used?

I think you just described overdraft protection. There are also laws regulating lines of credit (I don't know the specifics). One thing you have to remember is that a bank (or anyone) is much more willing to hold your money for you, than to lend you money. Not only is an overdraft an unsecured loan, but it's a loan with NO documentation other than what you submitted to open a checking account. That's pretty darn risky.

I tend to agree that debit card transactions should never create an overdraft (assuming that the transaction is reported immediately - but not all are). On the other hand, it IS very embarassing to have a card declined. I would think that some people would rather pay the fee than have their card declined. Even rich people overdraft sometimes (their money is in another account - not their checking account).

Debit cards get abused a lot. What is that one rule called? 80/20? Where 20% of your customers create 80% of your work. We would see the same names pop up over and over again on our overdraft reports. We hated those people because it caused a lot of work for us.

 

[miketheidiot]

Originally posted by: Patranus
Here is an idea....

Maybe you should take responsibility for knowing how much is in your bank account and then...DON'T SPEND MORE THAN YOU HAVE.

Oh, then you would have to take responsibility and not shift blame onto someone else like the "big bad corporations".

or the bank could do the responsible thing, and not approve the purchase

 

[Patranus]

Originally posted by: miketheidiot

Originally posted by: Patranus
Here is an idea....

Maybe you should take responsibility for knowing how much is in your bank account and then...DON'T SPEND MORE THAN YOU HAVE.

Oh, then you would have to take responsibility and not shift blame onto someone else like the "big bad corporations".

or the bank could do the responsible thing, and not approve the purchase

When you sign up for your account it makes it pretty clear what will happen if you try and over draw your account in the fine print.

You can however, instruct your bank to do just that.

 

[Athena]

Originally posted by: tk149
I think you just described overdraft protection. There are also laws regulating lines of credit (I don't know the specifics). One thing you have to remember is that a bank (or anyone) is much more willing to hold your money for you, than to lend you money. Not only is an overdraft an unsecured loan, but it's a loan with NO documentation other than what you submitted to open a checking account. That's pretty darn risky.

You are right, there are laws that regulate true loans and relatively none when it comes to credit cards. I don't object to the bank making something off unsecured loans -- that's what credit cards are What I object to is the fact that people end up getting (and being charged for) "loans" they didn't ask for and being charged loan shark rates for the privilege.

I would think that some people would rather pay the fee than have their card declined.

Then let those people make an explicit choice for that. Many people have bought into the idea of a debit card being more like cash only "safer" only to be hit with a fee for an on-the-spot loan they never actually requested.

Debit cards get abused a lot.

How? The are supposed to be "just like cash". There is no federal protection against fraud as there is for credit cards; how are they abused?

 

[miketheidiot]

Originally posted by: tk149

Originally posted by: Athena
Two points:

What I would expect is that with a debit card, the transaction would be declined. Given that it's all automatic, with no manual involvement whatsoever, there should be no fee, just a rejected transaction. It turns out though, that the default arrangement for a debit card is to put the customer in an overdraft position -- so that the customer won't be embarassed by being told that he doesn't have the money to buy that crappy whatever that he really didn't need. And if you do request that it be changed, you'll be told that the overdraft fee will be assessed even if the transaction is declined.

As you rightly point out, an overdraft is essentially an unsecured loan...so why the double hit each time? Why do customers end up paying a $20-$35 "loan origination fee" plus elevated interest charges? Why not just charge a flat origination fee to open an unsecured line of credit then charge interest as it is used?

I think you just described overdraft protection. There are also laws regulating lines of credit (I don't know the specifics). One thing you have to remember is that a bank (or anyone) is much more willing to hold your money for you, than to lend you money. Not only is an overdraft an unsecured loan, but it's a loan with NO documentation other than what you submitted to open a checking account. That's pretty darn risky.

I tend to agree that debit card transactions should never create an overdraft (assuming that the transaction is reported immediately - but not all are). On the other hand, it IS very embarassing to have a card declined. I would think that some people would rather pay the fee than have their card declined. Even rich people overdraft sometimes (their money is in another account - not their checking account).

Debit cards get abused a lot. What is that one rule called? 80/20? Where 20% of your customers create 80% of your work. We would see the same names pop up over and over again on our overdraft reports. We hated those people because it caused a lot of work for us.

i would rather have a card declined, its happens pretty often for other reasons and really isn't a big deal.

For disclosure, i raked about 181$ in over draft fees in july, $78 in may and $200+ last December. I'm probably my banks most profitable costumer On the most recent one I did notice that the charges were posted out of order. $35, $4, $1,5, when the order of purchases was the opposite.

 

[miketheidiot]

Originally posted by: Patranus

Originally posted by: miketheidiot

Originally posted by: Patranus
Here is an idea....

Maybe you should take responsibility for knowing how much is in your bank account and then...DON'T SPEND MORE THAN YOU HAVE.

Oh, then you would have to take responsibility and not shift blame onto someone else like the "big bad corporations".

or the bank could do the responsible thing, and not approve the purchase

When you sign up for your account it makes it pretty clear what will happen if you try and over draw your account in the fine print.

You can however, instruct your bank to do just that.

i've tried, 3 times, my bank does not do that. Furthermore, I when i got this account (8 years ago or so), they would decline transactions i couldn't cover. I wasn't even aware that it had changed until last december.

 

[StageLeft]

Originally posted by: miketheidiot
i would rather have a card declined, its happens pretty often for other reasons and really isn't a big deal.

For disclosure, i raked about 181$ in over draft fees in july, $78 in may and $200+ last December. I'm probably my banks most profitable costumer On the most recent one I did notice that the charges were posted out of order. $35, $4, $1,5, when the order of purchases was the opposite.

One of the most apropos usernames on AT.

 

[xj0hnx]

Originally posted by: soulcougher73

Originally posted by: tk149
It sucks, but if you can't keep track of your money, why would you expect someone else to hold your hand? Heck, when you order checks, you even get a handy dandy checkbook register. If you're overdrawn, then 99% of the time, it's your fault.

Also, the official reason that banks debit your account for the largest amount first, is because the larger amount is most likely more important. For example, would you rather have your rent/alimony check bounce, or your $5 check to the grocery store?

Having worked at a bank, and having processed overdrafts, I can say that there's quite a bit of labor involved with overdrafts. Sure, banks make money off them, but it's not like they wave a magic wand and there's no cost (or risk) involved.

The only problem with this is nothing actually bounces. They still pay it. But slam you with over draft fees. Its a very weak argument they use to justify this.

In this day and age with internet and computers every transaction should be instintanious and time stamped. There is no rearranging charges at all to benefit either party. Its pure bank bullshit.

It doesn't matter that they cover it and hit you with a fee, people should be responsible enough to know that if they don't have the money, not to spend it. Are people not keeping track of their money? I know how much I have down to the last cent, and know what I can spend and can't. If you only have $50 and go and spend $60, then it's your fault if you get hit with a fee because the bank had to cover the charge. I've got no love for banks, but jeezuz doesn't anyone take responsibility for their actions anymore?

 

[Patranus]

Originally posted by: miketheidiot
i've tried, 3 times, my bank does not do that. Furthermore, I when i got this account (8 years ago or so), they would decline transactions i couldn't cover. I wasn't even aware that it had changed until last december.

Than switch to a bank that allows you the service you require...

Isn't the free market and CHOICE great?

You act like you are being forced to keep a bank that provides shitty service. When people accept something they don't like when there are thousands of alternatives I tend to blame them and not the bank..

 

[piasabird]

ATM's are usually a service provided to the bank from a service provider. ATM rules are different than the Bank's Rules. Beware of using an ATM after hours with a Debit Card or a bank card.

Another thing that banks do is by default they cash the larger amounts first and not necessarily in real time. So if you write a big check and several small checks they will cash the large amounts first then you may receive several bounced checks even though they may have not been written in that order.

Never trust Banks to look out for you.

 

[xj0hnx]

Originally posted by: JayhaVVKU

Originally posted by: Patranus

Originally posted by: dmcowen674

Originally posted by: TheSlamma
Funny Dave, I have a Credit Union of Colorado, ING Orange and a BBVA Compass account and all of my numbers have all added up every single year. No secret conspiracy program removing my money little by little like you imply.

I seriously think you suffer from paranoia, you have all the symptoms (everyone out to get you, organizations all conspiring)

I have worked for the government in the past, if you think those people are smart enough to conspire then you are the one who is the fool. They couldn't handle 3rd grade math let alone an actual conspiracy.

You got lucky.

I used Wells Fargo when I was in Denver. After I left the state I left $500 in an account there.

6 months later they took all the money saying they had a $125 inactivity fee per month.

They even had the gall to demand another $48 to close the account.

Banks steal, period.

Well, did you read what you signed up for?

Funny how people bitch about something after they sign up for it because THEY didn't want to take the time to read the fine print.

I picture you spending hours poring over EULAs, Bank agreements, and various other contracts you receive in the mail and online. They should make one of those Budweiser "real men of genius" songs about you.

"Today we salute you, Mr. I read every word of fine print presented to me twice-over guy."

Are you kidding? You are giving someone access to your money and you DON"T read the fine print? You're darn right I am going to read every single word of any contract dealing with my money, just like I read every word in my lease, and then my mortgage. Everytime I sign up for some "No Interest" store credit card I read it too, nothing like knowing that if you are an hour late they are going to tack on ALL the interest, even back date it and add fees to it. Anyone that doesn't read the fine print has only themselves to blame.

 

[miketheidiot]

Originally posted by: Skoorb

Originally posted by: miketheidiot
i would rather have a card declined, its happens pretty often for other reasons and really isn't a big deal.

For disclosure, i raked about 181$ in over draft fees in july, $78 in may and $200+ last December. I'm probably my banks most profitable costumer On the most recent one I did notice that the charges were posted out of order. $35, $4, $1,5, when the order of purchases was the opposite.

One of the most apropos usernames on AT.

thanks. You should get one too, it would fit even better.

 

[miketheidiot]

Originally posted by: Patranus

Originally posted by: miketheidiot
i've tried, 3 times, my bank does not do that. Furthermore, I when i got this account (8 years ago or so), they would decline transactions i couldn't cover. I wasn't even aware that it had changed until last december.

Than switch to a bank that allows you the service you require...

Isn't the free market and CHOICE great?

You act like you are being forced to keep a bank that provides shitty service. When people accept something they don't like when there are thousands of alternatives I tend to blame them and not the bank..

there is no option available that doesn't have the same policies or worse.

 

[Athena]

Originally posted by: xj0hnx
It doesn't matter that they cover it and hit you with a fee, people should be responsible enough to know that if they don't have the money, not to spend it. Are people not keeping track of their money? I know how much I have down to the last cent, and know what I can spend and can't.

Good for you. Why though, should people be forced to take out a loan if they miscalculate? What's the big deal about just rejecting the transaction and sending them on their way?

If you walk up to the register thinking that you have 2 twenties in your pocket only to discover that you just have $34 (because you spent $6 the night before), you can tell the cashier to put some items back. What is it about the debit card agreement that obligates the holder to take out an undisclosed, on the spot loan when he's in the same situation? Isn't that antithetical to the whole idea behind debit cards?

If you only have $50 and go and spend $60, then it's your fault if you get hit with a fee because the bank had to cover the charge.

?? The bank doesn't "have" to cover the charge. The transaction can be declined...period.

And why do some issuers charge for declining a debit transaction but not for rejecting credit card purchases? Do you honestly see nothing wrong with that picture?

People aren't asking to spend money they don't have. They are actually being forced into using credit when they thought they were limiting their exposure and just getting easy access to what they had in their accounts...and sometimes being penalized for electing not to overspend.

 

[StageLeft]

Originally posted by: miketheidiot

Originally posted by: Patranus

Originally posted by: miketheidiot
i've tried, 3 times, my bank does not do that. Furthermore, I when i got this account (8 years ago or so), they would decline transactions i couldn't cover. I wasn't even aware that it had changed until last december.

Than switch to a bank that allows you the service you require...

Isn't the free market and CHOICE great?

You act like you are being forced to keep a bank that provides shitty service. When people accept something they don't like when there are thousands of alternatives I tend to blame them and not the bank..

there is no option available that doesn't have the same policies or worse.

They made something for people like you. It's called overdraft protection.

 

[ebaycj]

Originally posted by: tk149

Originally posted by: ebaycj

No, but I also do not feel I should pay 5000%+ in interest on it.

"Fees" that are automatically charged need to be included in existing usury laws. They need to be percentage based and therefore adjustable to the amount of the transaction that the fee is paid on.

Including: ATM fees, Overdraft fees, Chargeback fees, Wire Transfer fees, "Teller" fees, Online Banking fees, Telephone Banking fees, Electronic Check fees, Direct Debit fees, etc...

Not including: Mortgage / Loan application fees.

I think the fees are too high, but I don't believe this needs government regulation. Some people in this thread are very happy with their credit unions. If you don't like your banks' fees, go somewhere else. Banks charge what the market will support. If they charge more, they lose customers. That simple.

Also, most of the fees you listed involve direct costs to a bank. For example, ATM fees. IIRC, banks charge each other money for ATM transactions. Why not pass the cost on to the customer? Even the Telephone Banking fees involve some cost (albeit very low per transaction). You wouldn't expect McDonalds to not charge for cooking a burger, would you?

You know what offsets all of those costs? The fact that they can take MY MONEY and lend it out to others AND MAKE INTEREST ON IT as long as I have it deposited in their bank.

 

[Athena]

Originally posted by: ebaycj
You know what offsets all of those costs? The fact that they can take MY MONEY and lend it out to others AND MAKE INTEREST ON IT as long as I have it deposited in their bank.

...Which used to be the entire reason that banks existed. In those days they made money by providing the service of making money available to those who needed it. Now, they make more on fees than they do on renting money.

 

[ebaycj]

Originally posted by: ebaycj

Originally posted by: tk149

Originally posted by: ebaycj

No, but I also do not feel I should pay 5000%+ in interest on it.

"Fees" that are automatically charged need to be included in existing usury laws. They need to be percentage based and therefore adjustable to the amount of the transaction that the fee is paid on.

Including: ATM fees, Overdraft fees, Chargeback fees, Wire Transfer fees, "Teller" fees, Online Banking fees, Telephone Banking fees, Electronic Check fees, Direct Debit fees, etc...

Not including: Mortgage / Loan application fees.

I think the fees are too high, but I don't believe this needs government regulation. Some people in this thread are very happy with their credit unions. If you don't like your banks' fees, go somewhere else. Banks charge what the market will support. If they charge more, they lose customers. That simple.

Also, most of the fees you listed involve direct costs to a bank. For example, ATM fees. IIRC, banks charge each other money for ATM transactions. Why not pass the cost on to the customer? Even the Telephone Banking fees involve some cost (albeit very low per transaction). You wouldn't expect McDonalds to not charge for cooking a burger, would you?

You know what offsets all of those costs? The fact that they can take MY MONEY and lend it out to others AND MAKE INTEREST ON IT as long as I have it deposited in their bank.

Not to mention the fact that running a bunch of ATM's is WAY WAY cheaper than having that many local branches, and hiring that many tellers.

 

[StageLeft]

Originally posted by: dualsmp
Money Under The Mattress? Millions Do It

Hey it's an option.

?I don't understand about this bank stuff,? says Alvarez, 54, who lives in Texas. A nagging fear that she might make a mistake ?if I don't keep up with it right or something? keeps her from opening an account. She had one once, briefly. But she had trouble keeping track of her balance . She thinks that when the account closed, she owed the bank $12.

Umm
HAHAHAHAHAH what you don't understand this bank stuff? Damn, you're 54. You put money in, you take it out when you need it! wth!

A blue-collar worker pays an average $19.66 every week to cash a $478.41 handwritten paper check.

Poor people. They are just stupider.

 

[ebaycj]

Originally posted by: Skoorb
Poor people. They are just stupider.

Dumb people are both funny and sad at the same time.

The hilarious thing, is that Republicans are also both funny and sad at the same time.





True story:

Was talking to a Republican (with some Libertarian leanings), about education. Of course, he was for "vouchers" and "free markets" and "competition". It went like this:

My question to him was: "If truly free markets work so well, why do I have to pay for your kid's school (via the voucher program)?".

His response: "Well, uhhhmmm.. Well, there are positive externalities to society as a result of having an educated public. You know, people speaking the same language, and people being able to balance their checkbooks, etc.."

My follow up question: "OK, so while we're on the subject of positive externalities, What about Healthcare? There are undeniably lots of positive externalities to having the public be generally healthy."

His response: "That's BS. How do I benefit from your good health / being healthy?"

My response: "I could be an employee of yours. Healthy employees are significantly more productive than non-healthy employees."

His response: "Hmm.. Well I guess that's true. But then the employer could look out for itself by providing healthcare to it's employees. I still fail to see how I benefit from your health."

My response: "I could have untreated Black Plague right now, sitting across the table from you. How would you like that?"

His response: "Oh. Hmm. </silence>"

:laugh:

 

[Vic]

Strangely, I've never paid an overdraft fee in my entire life.

 

[sportage]

Here are some things to beware...
Many banks have stopped 'same day deposit".
That is, if you know a big check is coming thru that days business, it "use to be"
you could make a deposit, even thru the atm, as long as it is before cutoff time.
Then that deposit would post that nights work. And deposits post first before debits.
So if you got your deposit in on time that day, you were covered.

NOT SO NOW....

Now, many banks play a dirty little trick.
They show your deposit posting that same business day, but the funds, they claim,
are not available until the next morning.
So if you have a check for $500 coming thru to post that days business, and you made a $500 deposit to cover it, both items will show posting on the same business day.

BUT...

Now, that $500 check will bounce because your $500 deposit, showing the SAME posting date as the debit, will not show available until AFTER the check posted.
In other words, no more "same day deposit". Even though BOTH your check and your deposit lists same day posting, they will bounce your check. And charge you.
I suggest boycotting banks that no longer allow same day deposit.
One bank that DOES still honor same day is Wells Fargo.
USbank DOES NOT honor same day deposit, any longer.

So just beware...

Also, notice those "cash advance" options for checking accounts with direct deposit?
Its like a "pay-day-loan".
You can take up to $500 advance, which is auto-paid back as soon as any direct deposit
posts. That direct deposit will trigger repayment of any outstanding pay day advance, plus fee's.

What is interesting, is a few years ago the major banks had lobbyist in congress try to change 3rd party "pay day loan" companies rules. Or to force them out of business altogether.

I'm not talking about banks pay day loans, but 3rd party joints that offer pay day loans.
You see them all around town, in most states.
Well, the banks tried to stop or limit pay day loan shops ability to do business.
And in many states, they did succeed.
The banks claimed that pay day loan stores charge too high of fee's.
All while that same bank would charge YOU $30+ fee for a bounced check.
People were using pay day loans to cover checks, to avoid a bounced check, in most cases.

The banks did not like that. Pay day loan shops were cutting in on banks collecting overdraft fee's.
So the banks lobbied to change the rules and limit pay day loan shops.
So guess what followed...
Right after, the same very banks started offering their own "pay-day-loans" thru your
checking accounts that have direct deposit.
The banks are now pulling the same scam, charging very high fee's, for their own pay day loans.

Don't you just LOVE how banks operate?

 

[JKing106]

Why do you hate America? Why do you not love money more than anything?

 

[Patranus]

Originally posted by: Vic
Strangely, I've never paid an overdraft fee in my entire life.

Funny how that works...isn't it

 

[dmcowen674]

Originally posted by: sportage
Here are some things to beware...
Many banks have stopped 'same day deposit".
That is, if you know a big check is coming thru that days business, it "use to be"
you could make a deposit, even thru the atm, as long as it is before cutoff time.
Then that deposit would post that nights work. And deposits post first before debits.
So if you got your deposit in on time that day, you were covered.

NOT SO NOW....

Now, many banks play a dirty little trick.
They show your deposit posting that same business day, but the funds, they claim,
are not available until the next morning.
So if you have a check for $500 coming thru to post that days business, and you made a $500 deposit to cover it, both items will show posting on the same business day.

BUT...

Now, that $500 check will bounce because your $500 deposit, showing the SAME posting date as the debit, will not show available until AFTER the check posted.
In other words, no more "same day deposit". Even though BOTH your check and your deposit lists same day posting, they will bounce your check. And charge you.
I suggest boycotting banks that no longer allow same day deposit.
One bank that DOES still honor same day is Wells Fargo.
USbank DOES NOT honor same day deposit, any longer.

So just beware...

Also, notice those "cash advance" options for checking accounts with direct deposit?
Its like a "pay-day-loan".
You can take up to $500 advance, which is auto-paid back as soon as any direct deposit
posts. That direct deposit will trigger repayment of any outstanding pay day advance, plus fee's.

What is interesting, is a few years ago the major banks had lobbyist in congress try to change 3rd party "pay day loan" companies rules. Or to force them out of business altogether.

I'm not talking about banks pay day loans, but 3rd party joints that offer pay day loans.
You see them all around town, in most states.
Well, the banks tried to stop or limit pay day loan shops ability to do business.
And in many states, they did succeed.
The banks claimed that pay day loan stores charge too high of fee's.
All while that same bank would charge YOU $30+ fee for a bounced check.
People were using pay day loans to cover checks, to avoid a bounced check, in most cases.

The banks did not like that. Pay day loan shops were cutting in on banks collecting overdraft fee's.
So the banks lobbied to change the rules and limit pay day loan shops.
So guess what followed...
Right after, the same very banks started offering their own "pay-day-loans" thru your
checking accounts that have direct deposit.
The banks are now pulling the same scam, charging very high fee's, for their own pay day loans.

Don't you just LOVE how banks operate?

Awesome seeing someone else post about the bank scams.

They all calling you all kinds of shit on here too?

Shirley you must be absolutely wrong, the banks can't be scamming.