Why Are Overdraft Fees Legal?

[rsn 135]

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.

You sir, sound like a very lazy and irresponsible man who expects other people to do that which you should be doing yourself, ie keeping track of your personal finances.

No. I just gave up trying to keep a paper log of my account when I found impractical and inaccurate. I check my balance online regularly to know what the balance is, but it is nearly impossible to know your accurate balance when you have transactions coming and going...things like automatic payments, direct deposits, etc. If you actually keep a paper log of every single transaction from your account, you must either live a very simple and modest lifestyle or just clueless.

There are other ways to track your transactions without resorting to paper. I track all of mine via a spreadsheet I created w/ Google Docs. I can access it wherever I have internet (which is everywhere these days) and don't have to worry about backing it up. Every time a bill gets paid, I buy something, or I receive some money, I add a transaction record to my online spreadsheet. It's quick and useful. Sure, if I spent some time I could probably automate it at little more, but why bother?

[mawilson 2,133]

or you can just put everything on a credit card and get one statement each month that you pay off. that's the easiest thing to do.

Well, most people would still want to keep track of their spending to make sure they

don't spend more than they can pay off.

[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.

You sir, sound like a very lazy and irresponsible man who expects other people to do that which you should be doing yourself, ie keeping track of your personal finances.

No. I just gave up trying to keep a paper log of my account when I found impractical and inaccurate. I check my balance online regularly to know what the balance is, but it is nearly impossible to know your accurate balance when you have transactions coming and going...things like automatic payments, direct deposits, etc. If you actually keep a paper log of every single transaction from your account, you must either live a very simple and modest lifestyle or just clueless.

You can keep track of your finances on something like Quicken Online which downloads transaction data direct to your PC. With all the pending transactions that get applied to your account when using a debit card, you can get a general day to day picture, but you're not going to have 100% up to the minute information.

Cool. I'll look into it. I'll add that I use a CU that doesn't charge me any fees on the rare occasion when I'm overdrawn. I think fees for such things as overdraft should be justified such as be set based on how much it actually costs the bank, rather than some kind of punitive system. Behavior is effected on both sides and allowing banks to collect compounded fees encourages them to behave in a way that gets their customers to be overdrawn.

[Trumplestiltskin 5,791]

Well if they repo your stuff it gets sold in a public auction. You can get some good stuff from those for not very much.

[Amby 490]

or you can just put everything on a credit card and get one statement each month that you pay off. that's the easiest thing to do.

Well, most people would still want to keep track of their spending to make sure they

don't spend more than they can pay off.

you can check your transactions online. that way you could see if someone stole your credit card and went somewhere like taco tiera

[mawilson 2,133]

I think fees for such things as overdraft should be justified such as be set based on how much it actually costs the bank, rather than some kind of punitive system. Behavior is effected on both sides and allowing banks to collect compounded fees encourages them to behave in a way that gets their customers to be overdrawn.

Why? A (normal, profit-driven, capitalist) bank's job is to make money, not "be nice".

Don't like the fees? Go to another bank - there are plenty that don't charge any.

or you can just put everything on a credit card and get one statement each month that you pay off. that's the easiest thing to do.

Well, most people would still want to keep track of their spending to make sure they

don't spend more than they can pay off.

you can check your transactions online. that way you could see if someone stole your credit card and went somewhere like taco tiera

It was a restaurant? I thought it was a taco-shaped tiara.

[I AM NOT THAT GUY 5,715]

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.

You sir, sound like a very lazy and irresponsible man who expects other people to do that which you should be doing yourself, ie keeping track of your personal finances.

No. I just gave up trying to keep a paper log of my account when I found impractical and inaccurate. I check my balance online regularly to know what the balance is, but it is nearly impossible to know your accurate balance when you have transactions coming and going...things like automatic payments, direct deposits, etc. If you actually keep a paper log of every single transaction from your account, you must either live a very simple and modest lifestyle or just clueless.

I hardly if ever use my debit card. It's cash, check, or credit card. That keeps life much simplier. That started about the time I went into bussiness. So much easier to track where you are at.

Edited September 24, 2009 by Mister_Bill

[Trumplestiltskin 5,791]

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.

You sir, sound like a very lazy and irresponsible man who expects other people to do that which you should be doing yourself, ie keeping track of your personal finances.

No. I just gave up trying to keep a paper log of my account when I found impractical and inaccurate. I check my balance online regularly to know what the balance is, but it is nearly impossible to know your accurate balance when you have transactions coming and going...things like automatic payments, direct deposits, etc. If you actually keep a paper log of every single transaction from your account, you must either live a very simple and modest lifestyle or just clueless.

You can keep track of your finances on something like Quicken Online which downloads transaction data direct to your PC. With all the pending transactions that get applied to your account when using a debit card, you can get a general day to day picture, but you're not going to have 100% up to the minute information.

Cool. I'll look into it. I'll add that I use a CU that doesn't charge me any fees on the rare occasion when I'm overdrawn. I think fees for such things as overdraft should be justified such as be set based on how much it actually costs the bank, rather than some kind of punitive system. Behavior is effected on both sides and allowing banks to collect compounded fees encourages them to behave in a way that gets their customers to be overdrawn.

I agree with that to a certain extent, though I imagine that the thinking as far as overdrafts are concerned is that the fee should be sufficient to prevent people from getting overdrawn in the first place.

I think the larger problem is with credit cards and lending practices - that whole industry is designed to keep people in debt.

[Amby 490]

Mark - it was a resaurant. apparently they have really good tacos. a taco shaped tiara is way more hilarious though.

Steve - here's how to solve you overdraft problems...don't go over and tell jinky to stop spending so much money

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

I think fees for such things as overdraft should be justified such as be set based on how much it actually costs the bank, rather than some kind of punitive system. Behavior is effected on both sides and allowing banks to collect compounded fees encourages them to behave in a way that gets their customers to be overdrawn.

Why? A (normal, profit-driven, capitalist) bank's job is to make money, not "be nice".

Don't like the fees? Go to another bank - there are plenty that don't charge any.

Usury has had a long tradition of being illegal....like loan sharks. If you feel that banks should be able to freely set whatever amount of fees they want to charge, then why not any other service, like your water bill? HOA fees? Parking tickets? Competition does not always lead to lower fees.

[I AM NOT THAT GUY 5,715]

I think fees for such things as overdraft should be justified such as be set based on how much it actually costs the bank, rather than some kind of punitive system. Behavior is effected on both sides and allowing banks to collect compounded fees encourages them to behave in a way that gets their customers to be overdrawn.

Why? A (normal, profit-driven, capitalist) bank's job is to make money, not "be nice".

Don't like the fees? Go to another bank - there are plenty that don't charge any.

Usury has had a long tradition of being illegal....like loan sharks. If you feel that banks should be able to freely set whatever amount of fees they want to charge, then why not any other service, like your water bill? HOA fees? Parking tickets? Competition does not always lead to lower fees.

I think the government should really set prices for everything. That way if prices are too high, we can kick out the bums, and elect folks that would lower prices to a more reasonable level. They should set wages as well, so that greedy bussiness owners don't hog all the profits, and share fairly with the workers.

[mawilson 2,133]

I think the government should really set prices for everything. That way if prices are too high, we can kick out the bums, and elect folks that would lower prices to a more reasonable level. They should set wages as well, so that greedy bussiness owners don't hog all the profits, and share fairly with the workers.

We're not Russia and it's not 1917, my friend.

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

I think fees for such things as overdraft should be justified such as be set based on how much it actually costs the bank, rather than some kind of punitive system. Behavior is effected on both sides and allowing banks to collect compounded fees encourages them to behave in a way that gets their customers to be overdrawn.

Why? A (normal, profit-driven, capitalist) bank's job is to make money, not "be nice".

Don't like the fees? Go to another bank - there are plenty that don't charge any.

Usury has had a long tradition of being illegal....like loan sharks. If you feel that banks should be able to freely set whatever amount of fees they want to charge, then why not any other service, like your water bill? HOA fees? Parking tickets? Competition does not always lead to lower fees.

I think the government should really set prices for everything. That way if prices are too high, we can kick out the bums, and elect folks that would lower prices to a more reasonable level. They should set wages as well, so that greedy bussiness owners don't hog all the profits, and share fairly with the workers.

We already have regulatory commissions for utilities that regulate the rates and even regulations on banks in terms of fees. It's just that the laissez-faire, anti-federalists got their grimy paws into those regulations and dismantled many of them....which is essentially why we are in this financial mess in the first place. Bring back reasonable regulations on the banking industry...that's all I'm asking.

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

[I AM NOT THAT GUY 5,715]

I think the government should really set prices for everything. That way if prices are too high, we can kick out the bums, and elect folks that would lower prices to a more reasonable level. They should set wages as well, so that greedy bussiness owners don't hog all the profits, and share fairly with the workers.

We're not Russia and it's not 1917, my friend.

Why not? Does fairness frighten you?

Edited September 24, 2009 by Mister_Bill

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

Five Sneaky Bank Fees

YOU MAY HAVE FREE checking with your bank, but that doesn't mean you aren't paying fees elsewhere.

Where fees were once used as a deterrent from, say, repeatedly bouncing checks or other poor behaviors, they're now big money makers for banks, accounting for 56% of bank income, according to the Federal Deposit Insurance Corp. Banks earned an estimated $80 billion on fees in 2006. Ten years ago, fees accounted for just 3% of bank income.

1. Overdraft Shell Game Fees

If you think one $20 overdraft fee is bad enough, imagine a whole cascade. "Banks are allowed to change the order in which their checks clear," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. Bank of America, Chase, Citibank, HSBC, SunTrust, U.S. Bancorp, Wachovia, Wells Fargo and others all have policies to pay daily transactions in order from the largest to smallest dollar amount. Their take: Consumers' largest checks are their most important. (Who wants to bounce their mortgage payment?) But Mierzwinski says he and other consumer advocates see it as a way to draw in more fees. "They manage the bounces to get more bounces," he says.

Confused? Say you start the day with $100 in your account. You pay $5 for a latte, then $15 at the dry cleaners, $8 at the drugstore and $25 at the supermarket. At the end of the day, a $100 check you wrote last week clears your account. If your bank doesn't reorder, (e.g., Washington Mutual), you'd pay just one $22 overdraft fee. And if it does (e.g., Citibank, Chase), you'd pay five $30 fees, $150 in all. Worse still, your bank might tier overdraft charges based on how many you have (e.g., Bank of America, Wachovia). In that case, you could pay as much as $175 in fees.

Beyond watching your balance, your best recourse is to open a line of credit or overdraft protection with your bank. That $5 to $10 annually is small change compared to how much you could lose. Citibank charges $5 annually for either overdraft protection or a line of credit.

2. Paper Fees

With banking going digital, the days of getting your cancelled checks back in the mail are pretty much over. Most consumers are OK with the change -- until they need an old check, say, to prove a charitable contribution during a tax audit. With processed checks saved as digital images (and those only accessible for a year), expect to pay if you insist on paper copies. SunTrust, for example, charges $5 for each check, statement or other item photocopied.

The solution is pretty simple. If you're the type who likes to have paperwork on hand, simply sign up to have copies of your checks sent each month with your statement, suggests Jeffrey Blyskal, senior editor for Consumer Reports' Money Advisor. (Banks are willing to do this for free each month automatically; the fees come in when you're requesting a copy of an older check.) Alternatively, if you still have access to the digital check images stored at your online account, print them yourself. For tax and legal purposes, that's just as good as a paper copy from the bank.

3. Courtesy Overdraft Fees

"No question, the sneakiest fee is the fee for bounce protection," says Mierzwinski. These so-called courtesy overdraft fees kick in when the bank pays out your check -- even if it would have bounced. It's similar, but far nastier, than a typical overdraft fee, he says. (Overdraft fees traditionally pay out to both the merchant and the bank for a bounced check; courtesy fees are paid solely to the bank for covering a check instead of bouncing it.) You'll pay anywhere from $20 to $40 per check, depending on your bank, your account type, how much you're overdrawn and your standing as a customer. After that initial fee, you'll pay $2 to $5 per day until you've paid back the bank.

This is another fee that's easily avoided by setting up automatic transfers from your savings account when your checking account would otherwise bounce. You'll still pay a fee, just not as much. Chase, for example, charges your checking account just $10 for an overdraft-triggered transfer from another account. (You also could open a line of credit or sign up for overdraft protection, as mentioned in point one.)

4. Point-of-Sale Fees

Need another reason to sign for purchases instead of using your PIN? Some banks charge a point-of-sale fee to process PIN transactions, which go through a different network than those processed as credit. U.S. Bancorp charges its consumers in Colorado, Indiana, Kentucky and Ohio 25 cents for every PIN purchase. Wells Fargo charges a flat rate of $1 each month you make PIN transactions. To avoid these fees, pick up your pen and sign for purchases instead. (That gets you better protection, too.)

5. Last-Minute Bill Pay Fees

It's 10 p.m., and you know just where your phone bill is. In a drawer, unpaid -- and the due date is tomorrow. For an extra $5 to $15, called an expedited bill pay fee, your bank is happy to get the cash there on time. It's a lucrative part of business, says Blyskal. In 2006, banks raked in $1.26 billion from expedited bill pay alone, according to Javelin Strategy & Research, a market research company. The sad part: With these fees, it's nearly as expensive to pay on time as it is to pay late.

To avoid the fee, check out your bank's bill pay policies. Payments set up online are processed electronically, but can take a day or two to process. Citibank, for example, advises consumers to schedule payments at least two business days before their due date. Then set up free payment reminders to help you keep on track.

http://money.aol.com/smoney/banking/canvas...516132709990001

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