Why Are Overdraft Fees Legal?

[one...two...tree 2,762]

The Finance Lobby

— By Kevin Drum

If you use your debit card and overdraw your account, your bank will hit you with an overdraft fee. If you make five purchases of ten dollars each on the same day, you'll get five more overdraft fees. And just to make sure you get hit with as many fees as possible, your bank will make sure to debit your biggest transaction of the day first — even if it was actually the last one you made that day. That way your account goes to zero faster and every subsequent debit triggers another fee. Ka-ching! That's all bad enough, but there's one more thing: you have no choice in the matter:

Sen. Christopher J. Dodd (D-Conn.) plans to introduce legislation requiring banks to get permission from customers, rather than allowing overdrafts automatically. If customers decline and then try to overspend, the transaction would be rejected. A similar bill is pending in the House.

Dodd dismissed concerns about the impact on ailing banks. "People out there are getting whacked," he said. "They should have the right to say, 'Deny me the transaction.' "

Well, good for Chris Dodd. I hope his legislation passes. But seriously, ask yourself this: what does it say about the power of the finance lobby in America that this was ever legal in the first place? I mean, it's not even a close call. It's just flatly outrageous. It's outrageous that banks should be allowed to charge fees that amount to 1000% interest rates on a short-term loan; it's outrageous that they should be allowed to reorder your debits to make you pay more of these fees than you should; it's outrageous that they should be allowed to charge multiple fees per day in the first place, since they're essentially just making a single loan; and it's outrageous that they should be able to do this whether you want them to or not.

Let's say that again: They can force you to accept a loan at 1000% interest whether you want it or not. And no one before now has been able to stop them.

Think about that the next you see one of those happy happy happy Visa debit card commercials where they're exhorting you to just swipe that card for every purchase you make without giving it a second thought. There's a reason for that. And there's a reason they can get away with it.

http://www.motherjones.com/kevin-drum/2009/09/finance-lobby

[Arabella 4]

Or you could just keep better records of what is in your account so you don't over-spend, or have over-draft protection linked to your savings account.

[Trumplestiltskin 5,791]

I was actually surprised there are so many banking fees in this country.

In the UK you don't have to pay for checkbooks, and you aren't billed for having a low account balance.

We used to have those ATM fees for using a different banks ATM, but those were made illegal under European Law (there was a Trade and Industry study that found that it cost banks virtually nothing if you withdrew at another ATM) as the charges were unjustifiable.

[w¡n9Nµ7 §£@¥€r 123]

So if you're one of those irreponsible schmucks who overdrafts on a regular basis, would you rather they just say no?

[Trumplestiltskin 5,791]

Well its not much different from those credit card companies who take it upon themselves to keep extending your credit limit without your knowledge.

[one...two...tree 2,762]

Or you could just keep better records of what is in your account so you don't over-spend, or have over-draft protection linked to your savings account.

Who pulls out their checkbook log every time they use their debit card? Might as well write a check.

Regardless...it doesn't justify banks charging multiple, compounded fees. That should be illegal.

[w¡n9Nµ7 §£@¥€r 123]

Or you could just keep better records of what is in your account so you don't over-spend, or have over-draft protection linked to your savings account.

Who pulls out their checkbook log every time they use their debit card? Might as well write a check.

Regardless...it doesn't justify banks charging multiple, compounded fees. That should be illegal.

The fees exist because consumers wanted to be able to spend more than they had. The fees exist because consumer didn't want to have to learn the first thing about managing their own cash flow.

Get rid of the fees, but next time you overdraft I hope the little machine comes back with the following response - fuсk you, deadbeat.

[Trumplestiltskin 5,791]

Do they do that thing with balance transfers here - where they sucker you in for 0%, but then charge you interest on the balance that you acrued before you did the transfer?

[Sandrila 1]

I always say ....i am just making money to hand it over to someone else

[Trumplestiltskin 5,791]

In the case of the banking industry - its akin to having your pocket picked while you're being reamed.

[w¡n9Nµ7 §£@¥€r 123]

I always say ....i am just making money to hand it over to someone else

Too true. Between my mandatory or unavoidable payments to various layers of government and their corporate pimps, I'm just happy I can afford chinese takeout from time to time

[NickD 203]

Has to be a bank thing, with my bank, have the option if I try to spend more using my debit card, transaction will be denied, or can opt for a loan from my bank. Hardly ever use the debit card, get discounts when using my credit card, but pay my full bill at the end of the month. I get free billpay, saves me a first class stamp, and free checks, but rare to even write out a check anymore. We have banks in town that are crooks, know who you are dealing with. We have just as many banks as churches and taverns. Wonder how they all stay in business.

[w¡n9Nµ7 §£@¥€r 123]

True, true. Why are there so many freakin' banks?

[zqt3344 21]

It is because Ovomit and the Democrat Congress do not have the balls to take on their lobbyist friends of the Finance industry and they want their campaign contributions that is why! It is white collar crime what has been going on and has been allowed by banks to do for the past 9 years in the USA! And they are a major reason we had this major recession with their reckless lending practices on mortgages from 2001-2007! FACT! :angry: :angry:

The Finance Lobby

— By Kevin Drum

If you use your debit card and overdraw your account, your bank will hit you with an overdraft fee. If you make five purchases of ten dollars each on the same day, you'll get five more overdraft fees. And just to make sure you get hit with as many fees as possible, your bank will make sure to debit your biggest transaction of the day first — even if it was actually the last one you made that day. That way your account goes to zero faster and every subsequent debit triggers another fee. Ka-ching! That's all bad enough, but there's one more thing: you have no choice in the matter:

Sen. Christopher J. Dodd (D-Conn.) plans to introduce legislation requiring banks to get permission from customers, rather than allowing overdrafts automatically. If customers decline and then try to overspend, the transaction would be rejected. A similar bill is pending in the House.

Dodd dismissed concerns about the impact on ailing banks. "People out there are getting whacked," he said. "They should have the right to say, 'Deny me the transaction.' "

Well, good for Chris Dodd. I hope his legislation passes. But seriously, ask yourself this: what does it say about the power of the finance lobby in America that this was ever legal in the first place? I mean, it's not even a close call. It's just flatly outrageous. It's outrageous that banks should be allowed to charge fees that amount to 1000% interest rates on a short-term loan; it's outrageous that they should be allowed to reorder your debits to make you pay more of these fees than you should; it's outrageous that they should be allowed to charge multiple fees per day in the first place, since they're essentially just making a single loan; and it's outrageous that they should be able to do this whether you want them to or not.

Let's say that again: They can force you to accept a loan at 1000% interest whether you want it or not. And no one before now has been able to stop them.

Think about that the next you see one of those happy happy happy Visa debit card commercials where they're exhorting you to just swipe that card for every purchase you make without giving it a second thought. There's a reason for that. And there's a reason they can get away with it.

http://www.motherjones.com/kevin-drum/2009/09/finance-lobby

[Malrothien 6]

I don't mind overdraft fees so much. What I do mind is the bank going out of it's way to charge overdrafts: pulling payments before putting deposits in.