Why Are Overdraft Fees Legal?

[Dave-n-Oksana 49]

I think the proposed bill is a good idea. However, I do not have a problem with overdraft fees. You shouldn't spend money that you don't have, period. The fees are exhorbitant as a punitive measure. What I object to regarding banks is their procedures that they do in order to create overdrafts, like having a policy that they take debit/check withdrawals before a deposit. So, If you used your debit card on the day of your paycheck and did not have enough money in the bank prior making the debit charge, you'll receive overdraft fees.

I agree that you shouldn't spend money you don't have, but sometimes things happen. It is what happened to me. I had been a good customer at my bank and had come across a rough patch and when I talked to my banker about a small short term loan, they suggested adding overdraft protection to my account instead. At no time did they mention that using it would involve these fees.

Though I must admit that the way they processed the debits and credits was on the customer side. They would place all transactions as pending until the end of the day and then they would process the days transactions. Deposits were processed first then checks and withdrawals were processed starting with the lowest value to the largest.

[Heracles 417]

I think the proposed bill is a good idea. However, I do not have a problem with overdraft fees. You shouldn't spend money that you don't have, period. The fees are exhorbitant as a punitive measure. What I object to regarding banks is their procedures that they do in order to create overdrafts, like having a policy that they take debit/check withdrawals before a deposit. So, If you used your debit card on the day of your paycheck and did not have enough money in the bank prior making the debit charge, you'll receive overdraft fees.

Unfortunately not everyone is as wealthy as you Rob

[Heracles 417]

Where is Matt to tell us how awesome not being regulated is? The guy seems to ignore all of these examples. In Europe these things are heavily regulated, hence, why people are much less likely to be ripped off.

Same with mobile fees and charges, like paying for incoming calls and incoming sms; which is an absolute joke and rip-off. A $99.95 plan in Aus means I pay $99.95 period. Here you need to add on 13 different convenient fees to everything. Someone like Matt needs to live overseas for a while so he actually see the benefit of regulation and the protection of consumers.

I see. So paying more is only a good thing if you're paying the IRS. I get you.

Joe come on. Government regulation = rules. It's the reason why we have therm in all facets of life, including sport.

The other example of mine is how regulation works. Where if cell company advertise $99.95 for a cell plan, that is all I pay overseas period. The system here is clearly anti-logic and stuck in the stone ages. You will not find many developed countries where the price on the shelf or on the pamphlet is not what you actually pay at the POS. When the shelf sticker price states $2.50 for Corn Flakes, it means $2.50 at the register; as tax has already been included. Not doing so is just plain old dodgy and allows companies like cell and cable companies to hide fees in their price. Once again, something regulated against in other first world countries. Which you seen to think is not logical. Regulation is not anti-business, it's anti-shifty.

Edited September 24, 2009 by Booyah!

[Nik+Heather 122]

I think people who spend money they don't have *deserve* to pay the fees. And every time they thoughtlessly charge without knowing their balance, they should get slapped again. I've gotten there before as well, and while I wouldn't say I "happily" paid it out, I think I deserved it quite soundly.

The only part which I agree with is about the preferential/time shuffling - taking 3 days to credit the deposit but almost instantaneously debiting the charge isn't fair, but on the other hand, it is the responsibility of the consumer to know the rules and if you don't follow them, or don't take your business to an institution which operates the way you need, I don't have a lot of any sympathy.

[rsn 135]

I think the proposed bill is a good idea. However, I do not have a problem with overdraft fees. You shouldn't spend money that you don't have, period. The fees are exhorbitant as a punitive measure. What I object to regarding banks is their procedures that they do in order to create overdrafts, like having a policy that they take debit/check withdrawals before a deposit. So, If you used your debit card on the day of your paycheck and did not have enough money in the bank prior making the debit charge, you'll receive overdraft fees.

Unfortunately not everyone is as wealthy as you Rob

I don't see how it matters how well-off one is. If you spend your money wisely, live within your means, and plan accordingly, you will not be in this scenario. Banks are not charities, they are businesses. If someone runs into an emergency situation where they need extra money quickly, there are loan-based options available to them. Some of these options are more attractive then others. Those with poor credit will have to settle for the less-attractive options. Those with good credit are rightfully rewarded with better options.

[Heracles 417]

I think people who spend money they don't have *deserve* to pay the fees. And every time they thoughtlessly charge without knowing their balance, they should get slapped again. I've gotten there before as well, and while I wouldn't say I "happily" paid it out, I think I deserved it quite soundly.

The only part which I agree with is about the preferential/time shuffling - taking 3 days to credit the deposit but almost instantaneously debiting the charge isn't fair, but on the other hand, it is the responsibility of the consumer to know the rules and if you don't follow them, or don't take your business to an institution which operates the way you need, I don't have a lot of any sympathy.

In this day of digital technology, a bank can simply deny the transaction. Furthermore, someone spending $1 over does not deserve to pay a $35 dollar fee. Then another $35 fee for the fee going over.

I once wrote a check using my wrong check book and HSBC covered the entire $800. So in that case, sure I had no problem paying the single fee. The fee is warranted for that amount overdrawn. Actually HSBC told me to contact them after it posts and they would refund the fee but I didn't bother.

[mawilson 2,133]

Where is Matt to tell us how awesome not being regulated is? The guy seems to ignore all of these examples. In Europe these things are heavily regulated, hence, why people are much less likely to be ripped off.

It's not Matt's fault that people are stupid and open accounts with banks that charge

them fees for anything and everything under the sun. Many banks don't.

Screw the idiots - survival of the fittest, etc.

[Heracles 417]

I don't see how it matters how well-off one is. If you spend your money wisely, live within your means, and plan accordingly, you will not be in this scenario. Banks are not charities, they are businesses. If someone runs into an emergency situation where they need extra money quickly, there are loan-based options available to them. Some of these options are more attractive then others. Those with poor credit will have to settle for the less-attractive options. Those with good credit are rightfully rewarded with better options.

The people who can least afford it are punished the most. People with bad credit pay more for vehicle insurance, as if all of a sudden they forget how to drive. This is the sort of ####### that is regulated abroad. You cannot find bullshit to discriminate again the people who can least afford it. This is the sort of the ####### that keeps minorities and the poor in ghettos and slums. They have zero chance of escaping this bondage let alone paying off debt, for example, with a 29.99% interest rate.

Edited September 24, 2009 by Booyah!

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

I think people who spend money they don't have *deserve* to pay the fees. And every time they thoughtlessly charge without knowing their balance, they should get slapped again. I've gotten there before as well, and while I wouldn't say I "happily" paid it out, I think I deserved it quite soundly.

The only part which I agree with is about the preferential/time shuffling - taking 3 days to credit the deposit but almost instantaneously debiting the charge isn't fair, but on the other hand, it is the responsibility of the consumer to know the rules and if you don't follow them, or don't take your business to an institution which operates the way you need, I don't have a lot of any sympathy.

In this day of digital technology, a bank can simply deny the transaction. Furthermore, someone spending $1 over does not deserve to pay a $35 dollar fee. Then another $35 fee for the fee going over.

I once wrote a check using my wrong check book and HSBC covered the entire $800. So in that case, sure I had no problem paying the single fee. The fee is warranted for that amount overdrawn. Actually HSBC told me to contact them after it posts and they would refund the fee but I didn't bother.

Well said.

[mawilson 2,133]

I don't see how it matters how well-off one is. If you spend your money wisely, live within your means, and plan accordingly, you will not be in this scenario. Banks are not charities, they are businesses. If someone runs into an emergency situation where they need extra money quickly, there are loan-based options available to them. Some of these options are more attractive then others. Those with poor credit will have to settle for the less-attractive options. Those with good credit are rightfully rewarded with better options.

The people who can least afford it are punished the most. People with bad credit pay more for vehicle insurance, as if all of a sudden they forget how to drive. This is the sort of ####### that is regulated abroad. You cannot find bullshit to discriminate again the people who can least afford it. This is the sort of the ####### that keeps minorities and the poor in ghettos and slums. They have zero chance of escaping this bondage let alone paying off debt, for example, with a 29.99% interest rate.

Try 99.25% interest rate.

[Heracles 417]

I don't see how it matters how well-off one is. If you spend your money wisely, live within your means, and plan accordingly, you will not be in this scenario. Banks are not charities, they are businesses. If someone runs into an emergency situation where they need extra money quickly, there are loan-based options available to them. Some of these options are more attractive then others. Those with poor credit will have to settle for the less-attractive options. Those with good credit are rightfully rewarded with better options.

The people who can least afford it are punished the most. People with bad credit pay more for vehicle insurance, as if all of a sudden they forget how to drive. This is the sort of ####### that is regulated abroad. You cannot find bullshit to discriminate again the people who can least afford it. This is the sort of the ####### that keeps minorities and the poor in ghettos and slums. They have zero chance of escaping this bondage let alone paying off debt, for example, with a 29.99% interest rate.

Try 99.25% interest rate.

That company would be fined into submission in the UK or AUS, which that sort of #######.

The should be able to make a fair buck but the rate is bloody extortion. I would jail the directors and executives for that.

Edited September 24, 2009 by Booyah!

[I AM NOT THAT GUY 5,715]

Much of what the Bank charges in fees goes to pay for FDIC insurance. If you get rid of the FDIC, then banks should be able to reduce fees.

The FDIC doesn't receive any tax dollars; instead it's funded by the premiums paid by banks and thrifts for insurance coverage on deposits. Its deposit insurance fund is really just an accounting entry with the Treasury Department.

http://www.bankrate.com/brm/news/investing...IC-facts_a1.asp

[Heracles 417]

Much of what the Bank charges in fees goes to pay for FDIC insurance. If you get rid of the FDIC, then banks should be able to reduce fees.

That is the biggest horse sh-t I have ever heard.

[trinket 30]

I think the proposed bill is a good idea. However, I do not have a problem with overdraft fees. You shouldn't spend money that you don't have, period. The fees are exhorbitant as a punitive measure. What I object to regarding banks is their procedures that they do in order to create overdrafts, like having a policy that they take debit/check withdrawals before a deposit. So, If you used your debit card on the day of your paycheck and did not have enough money in the bank prior making the debit charge, you'll receive overdraft fees.

Its not just about spending money that I don't have. When I first came to US, I had no idea about overdraft, limited chequing, limited transferring fees. So being with the Indian mindset (that's no credit), I would do all my purchase through chequing account, that is my debit card and transfer money from my savings to checking as needed, but boom I was slapped with excessive transferring, excessive use of debit card fees, I think I paid around $40 my first month because the silly me didn't know there are those hidden fees for using my own money.

Never in my life I thought I would be charged for using my own money excessively. With the sh*tty bank I was, they allowed only 3 online transaction per month and only 4 cheque use. These days I use my $500 limit credit card for any purchase and I do only 1 transaction per month when I pay off my credit through my chequing.

[rsn 135]

I think the proposed bill is a good idea. However, I do not have a problem with overdraft fees. You shouldn't spend money that you don't have, period. The fees are exhorbitant as a punitive measure. What I object to regarding banks is their procedures that they do in order to create overdrafts, like having a policy that they take debit/check withdrawals before a deposit. So, If you used your debit card on the day of your paycheck and did not have enough money in the bank prior making the debit charge, you'll receive overdraft fees.

Its not just about spending money that I don't have. When I first came to US, I had no idea about overdraft, limited chequing, limited transferring fees. So being with the Indian mindset (that's no credit), I would do all my purchase through chequing account, that is my debit card and transfer money from my savings to checking as needed, but boom I was slapped with excessive transferring, excessive use of debit card fees, I think I paid around $40 my first month because the silly me didn't know there are those hidden fees for using my own money.

Never in my life I thought I would be charged for using my own money excessively. With the sh*tty bank I was, they allowed only 3 online transaction per month and only 4 cheque use. These days I use my $500 limit credit card for any purchase and I do only 1 transaction per month when I pay off my credit through my chequing.

Yep, their are lots of predatory banks and lending agencies out there. No arguments. I totally understand how new immigrants can get sucked in by one of these despicable companies too. Unfortunately, live and learn is the only solution I can think of. If anyone thinks the government is going to fix anything, they are mistaken. No politician is going to prevent banks/lending agencies from making as much money as they want. All they will do is make it a bit more difficult. Politicians don't want to piss off any consistent campaign contributors by actually doing something worthwhile for their constituents without any loopholes.

Edited September 24, 2009 by rsn