Why Are Overdraft Fees Legal?

[Nik+Heather 122]

When you live pay check to pay check it can be a real balancing act between incoming and outgoings - I don't think it's totally fair to say such people are 'irresponsible'.

Are you kidding? The only reason why they are scraping by is because they are lazy slobs with no sense of responsibility. Now hand me that sponge cake, dear.

That's a bit dramatic. I don't think they are lazy - probably working hard for that pay check. But then they spend too much, on things they don't need. I agree there are people out there who are in debt without their control, but I think many more are in debt because they just won't stop spending until they get to zero (or beyond) then something "big" and "emergency"-like comes along, and wham.

The responsibility comes in when you drive an older car, live in a smaller house, and take other actions on your budget such that you can save, so that when the big emergency bill comes in you have some savings and some hope of paying for it.

[웃 910]

09/23/2009 10:33 PM ET

Big banks to lighten overdraft rules

Wells Fargo, which is Minnesota's largest bank by share of deposits, said it will soon allow current and future customers to opt out of overdraft coverage, meaning that customers can turn off their ability to spend once their accounts hit zero. Then their purchases would be automatically rejected at the cash register if they don't have enough money in their accounts to cover the total.

The banks are also taking steps to limit fees on small purchases consumers might have avoided had they known they would be charged an overdraft fee. For instance, both Wells Fargo and JP Morgan Chase said they will cancel overdraft fees for all accounts overdrawn by $5 or less. This makes it less likely that someone will end up paying $35 for buying a bus ticket or a cup of coffee.

http://www.usatoday.com/money/industries/b...raft-fees_N.htm

Edited September 24, 2009 by Confucian

[mawilson 2,133]

what percentage of americans actually use their credit cards how they're meant to?

100%

[The_Dude 1,142]

what percentage of americans actually use their credit cards how they're meant to?

100%

You are incorrect sir!!!! What about those who use theirs to cut up various powders for illegal ingestion?

[Amby 490]

what percentage of americans actually use their credit cards how they're meant to?

100%

screw you. you know what I meant. I should have worded it different, you #######

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

When you live pay check to pay check it can be a real balancing act between incoming and outgoings - I don't think it's totally fair to say such people are 'irresponsible'.

Are you kidding? The only reason why they are scraping by is because they are lazy slobs with no sense of responsibility. Now hand me that sponge cake, dear.

That's a bit dramatic. I don't think they are lazy - probably working hard for that pay check. But then they spend too much, on things they don't need. I agree there are people out there who are in debt without their control, but I think many more are in debt because they just won't stop spending until they get to zero (or beyond) then something "big" and "emergency"-like comes along, and wham.

The responsibility comes in when you drive an older car, live in a smaller house, and take other actions on your budget such that you can save, so that when the big emergency bill comes in you have some savings and some hope of paying for it.

Well said. I was merely parroting the usual rhetoric that some here spew out.

There is an aspect of - "you can have your slice of the American Dream too" - that plays into people's managing of money....and who better to use that sales pitch than to those are are lower income? If you are led to believe that your economic mobility is completely in your hands, IMO, you're more likely to take bigger financial risks, with the optimism that you can simply make more money. Car salesman are notorious for using that idea as a selling point to get people to take on bigger car payments than they can really afford.

Edited September 24, 2009 by Col. 'Bat' Guano

[mawilson 2,133]

what percentage of americans actually use their credit cards how they're meant to?

100%

You are incorrect sir!!!! What about those who use theirs to cut up various powders for illegal ingestion?

I stand corrected! Some people also use credit cards to open doors.

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

09/23/2009 10:33 PM ET

Big banks to lighten overdraft rules

Wells Fargo, which is Minnesota's largest bank by share of deposits, said it will soon allow current and future customers to opt out of overdraft coverage, meaning that customers can turn off their ability to spend once their accounts hit zero. Then their purchases would be automatically rejected at the cash register if they don't have enough money in their accounts to cover the total.

The banks are also taking steps to limit fees on small purchases consumers might have avoided had they known they would be charged an overdraft fee. For instance, both Wells Fargo and JP Morgan Chase said they will cancel overdraft fees for all accounts overdrawn by $5 or less. This makes it less likely that someone will end up paying $35 for buying a bus ticket or a cup of coffee.

http://www.usatoday.com/money/industries/b...raft-fees_N.htm

Good for them. And you can bet your bottom dollar they are doing so to in hopes that Congress won't pass more regulations regarding such fees.

Edited September 24, 2009 by Col. 'Bat' Guano

[mawilson 2,133]

There is an aspect of - "you can have your slice of the American Dream too" - that plays into people's managing of money....and who better to use that sales pitch than to those are are lower income? If you are led to believe that your economic mobility is completely in your hands, IMO, you're more likely to take bigger financial risks, with the optimism that you can simply make more money. Car salesman are notorious for using that idea as a selling point to get people to take on bigger car payments than they can really afford.

Risk taking is the lifeblood of capitalism. Nothing wrong with that.

It really pisses me off when I hear Obama talking about wanting to punish "excessive risk taking".

Who is he to tell people how to risk *their* money?

[rebeccajo 14]

The thing is - banking didn't use to be this way. It was through deregulation that allowed banks to start charging fees for everything under the sun.

That's silly. Back in the "good old days" (1970s?), banks didn't charge ATM or credit card fees

because ATMs and credit cards didn't exist. There were no overdraft fees because folks used

to go to a bank branch to get their cash.

Ahem. I beg your pardon.

Correct there were no ATM's so no fees for that.

But there certainly were credit card fees - usually annual membership fees.

And there certainly were overdraft fees - I know because we used to assess them at the bank I worked at (went to work there in 1977). Think it was $3.

Steven is correct in that de-regulation was when fees started to go up.

[The_Dude 1,142]

There is an aspect of - "you can have your slice of the American Dream too" - that plays into people's managing of money....and who better to use that sales pitch than to those are are lower income? If you are led to believe that your economic mobility is completely in your hands, IMO, you're more likely to take bigger financial risks, with the optimism that you can simply make more money. Car salesman are notorious for using that idea as a selling point to get people to take on bigger car payments than they can really afford.

Risk taking is the lifeblood of capitalism. Nothing wrong with that.

It really pisses me off when I hear Obama talking about wanting to punish "excessive risk taking".

Who is he to tell people how to risk *their* money?

I think he is referring more to Bernie Madoff type of risk than the normal risk that investment banks take.

[mawilson 2,133]

And there certainly were overdraft fees - I know because we used to assess them at the bank I worked at (went to work there in 1977). Think it was $3.

Well... $3 in 1977 is about $11 in 2009 dollars.

I think he is referring more to Bernie Madoff type of risk than the normal risk that investment banks take.

Ponzi schemes are already illegal - you don't need new regulations to prosecute the likes of Bernie Madoff.

[Niels Bohr 72]

People tend to overlook these things. Come on, how long have visa debit came into existence? It only became mainstream for consumption not that long ago, so, lawmakers did not question them. Until now, when the people are getting laid off back to back, and banks receiving stimulus funds (from taxpayers I'd might add), they are also double dipping by charging them overdraft fees.

Indeed. Privatized profit, socialized loss. Doesn't seem quite fair does it...

My goodness! You are wising up by leaps and bounds, I believe you are barely British anymore! I would like to take credit for it but I know Danno probably deserves his share.

Exactly, you cannot socialize loss. People that make stupid decisions and those that follow them need to pay the price. The people that MADE the money, need to PAY the money when it is lost! I mean I KNEW enough to not buy GM stock and THEN, Whammo! It gets forced on me in order to socialize the loss of dumb@ss management and stubborn, suicidal, unions. What's up with that??? Eh?

When we get the government involved we lose all the advantage of education and responsibility as the government seeks to make us all equally stupid. bring us all down to the lowest common denominator and THEn they will be sending photos of YOU around the internet while you shop in WalMart!!!!!!!

America is about protecting people's rights. If you want exploitation, that's fine. There's other things that people exploit. Why aren't you fight that? You know it's not right. So this reasoning is the same as the other.

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

And there certainly were overdraft fees - I know because we used to assess them at the bank I worked at (went to work there in 1977). Think it was $3.

Well... $3 in 1977 is about $11 in 2009 dollars.

$11 is a hell of a lot less than $35, which is what many banks charge.

[rebeccajo 14]

I can recall sitting in a sales meeting in the early 80's. The savings and loan I worked for had just been 'sold' to a bigger bank up the road (thanks to Regulation Q).

Naturally, bigger bank is now the 'parent' and we must change all of our products to theirs.

Bigger bank had overdraft fees far higher than ours. They also had a host of other fees our customers had not experienced before.

I can still recall the VP telling us that these fees were what allowed them to offer 'free' accounts to certain customers they were targeting for new business - specifically direct deposit payroll accounts from a couple of large local employers.