I know that the “banks are evil” meme is a perennial favorite, but Jesus Christ people, this one is not their fault. You can lay this one squarely at the feet of government, more specifically you can lay it at the feet of Dick Durbin, author of the Durbin act.
This is one stupid piece if government regulation, that not only inconveniences most people but has the added benefit o helping no one.
Say you have $100 left, and make 4 transactions - in order - of $5, $10, $15 and $110. You owe an overdraft fee, sure. But if the bank rearranges the transactions as
$110, $5, $10, $15 they get to charge you 4 overdraft fees. They were maximizing profit to make up for screwing the pooch on mortgages, not recovering costs in a fair way.
Huh. What is that, exactly?
There was a thread about whether people used check registers, and it seemed that most people did not, but preferred to check their balance on-line. I’m sure the banks are aware of this, and aware that not having immediate access to your balance can lead to overdrafts.
Even Windows asks you are you sure before you do something stupid. Why not banks?
Please point to the specific part of the legislation that mandates a $5 monthly fee for debit cards.
Not that you appear to care, but it matters if you’re keeping a running balance in your checkbook and order the charges by time, you’d get hit with one overdraft fee, but with the way the banks were doing it, you’d get hit with many?
The tired, typical scenario. I have $97 in my account. Payday is tomorrow. I go out, get groceries for $20, maybe a coffee for $3, gas for $20, lunch for $10.
Then I get suddenly sick, get into the clinic and find out I need some kinda drug. Not under my prescription plan, so I end up biting the bullet and paying the $110 for it, figuring I’ll eat the overdraft to get better faster.
So by my math, that’s $97-20-3-20-10 = $44, - $110 = -$76, overdraft fee of $35, pay it off tomorrow with my paycheck, it happens.
By the (pre-new-regs) bank math, that was $97-110-20-3-20-10, = -$76, plus 5 overdraft fees of a total of $175.
Sorry, I can’t get mad at the government for fixing THAT bullshit. Charges happen in the order they happened, and if the banks can’t make enough money on that, they need to figure out something.
I couldn’t get a business loan at my credit union. However, other than that, the CU will provide just about every service that I want.
The banks had set up the system of paying the larger checks first in order to collect as much money in overdraft fees as possible. The banks are pretty quick when it comes to taking out fees. Not so quick when it comes to posting deposits into accounts. The objections were basically that the banks were using fees as a major source of profit, and manipulating them to maximize that profit.
Yeah, the banks will force people to get free loans from them for purchase instead of having the money withdrawn immediately. That will show us!
When you’re poor and on a weekly shit paycheck, though, emergencies happen. It might be worth $35 fee for what amounts to a highly informal loan the day before payday. It’s probably not worth a fee for every unprocessed charge extant when you have to spend for an emergency.
No one? I think that limiting the extent to which financial institutions can savage the poor helps quite a lot of people, actually. Even those of us who don’t incur these fees but just like to live in a society with some basic fairness in place. (This obviously doesn’t include you, but you’re kind of a dick anyway so no one’s losing any sleep over it.)
Why do you feel you’re entitled to free account services, anyway? Shouldn’t you have to pay for the things you want?
I don’t know you, but I am fairly certain I’ve been poorer than you.
Yes, emergencies happen.
No, emergencies do not make money magically appear in my bank account, regardless of how dire my straits are. Nor does the presence of a dire emergency force my bank to “informally” lend me money.
I never thought it did when I was dirt poor, and don’t think it does now.
Well, thanks for clearing up the very perplexing question “Will you be charged an overdraft fee if you do not overdraw your account?”
I do wonder, however, how you think the above proves anything substantial with respect to the proposition that banks should not be allowed to sequence their paying of items presented in order to maximize overdraft fees. Sure, avoidability represents a floor with respect to the legitimacy of a given penalty, but I hardly think it is the first and last point of analysis.
For instance, suppose we adopted a rule that after three of posts like this and this, a member would be automatically, permanently, and irrevocably banned.
Would you have no complaint at all, given that such a punishment could be avoided by scrupulous attention to the correctness of what you post?
Well, looks like I finally have the shove I’ve needed to switch to a credit union.
Don’t need to. Just wondering if you’re referring to consumers or too-big-to-fail banks on your first paragraph there.
-Joe
Hey, Giraffe?
Is your idea of “fairness” is that I should pay a portion someone else’s fees because that person thinks the rules of arithmetic change based on how much they need the money? Is that “fairness?” Really?
If the bank wants to charge me, let them charge me. I have no entitlement to free account services. But by the same token, if they wish to charge people for bouncing checks, let them.
You seem to have glommed onto the first idea but rejected the second. How does “fairness” come into play here?
One word:
Amen.
I would expect that a message board with that rule would eventually find itself bereft of members, and while I might argue against the wisdom of that rule, I would never support a law forbidding the message board from making and enforcing such a rule.
Now you answer the question: suppose Congress passed a law, just as they have done for the banks, forbidding message boards from enforcing the rule you have just described. Would you support that?
Yes, everyone is on the same page that people who overdraw their bank accounts are at fault. No one believes that overdrawing one’s account should be consequence-free.
The question is whether there should be a limit to how harsh the penalities for that mistake should be. Would you be OK if every bank started charging $1,000 per overdraft? How about $10,000? No problem, right? If you don’t want to risk it, you can just keep your money in cash, assuming you can find someone to cash your paycheck since the banks have also all started charging a 90% fee to cash checks from non-customers.
Are you under the impression that overdraft fees are now illegal?
Yet the rules of arithmetic DO change when you’re changing a flat fee per transaction, not a percentage of total overdrawn. There have been several examples in this thread showing you exactly how they change.
If banks simply charged you fees based on the chronological order of transactions, something that makes sense, there would be grumbling but much less overt anger, and regulation would likely not have happened. At the very least if the banks made their methods abundantly clear to consumers, a case for “don’t say we didn’t warn you” could be made.