Banks Make $38 Billion From Overdraft Fees

Financial Times:

US banks stand to collect a record $38.5bn in fees for customer overdrafts this year, with the bulk of the revenue coming from the most financially stretched consumers amid the deepest recession since the 1930s, according to research. The fees are nearly double those reported in 2000.

The finding is likely to increase public hostility towards the financial sector, which has been under political pressure to ease the burden on consumers by increasing credit availability and lending more fairly after being bailed out by taxpayers.

Read the whole story: Financial Times

Comments

[Kathryn101]

A checking account is NOT a loan, and should not be used as one.

Writing a bad check is a CRIME, not a priviledge!

When a bank allows a bad check or debit card transaction to clear, here's what happens:

1. The bank pays the merchant
2. The bank protects the customer's credit - so payments are not reported as late or missing to the credit bureau.
3. The bank protects the customer's dignity. No bounced check fees from the merchant, no copy of the check taped to a local cash register with a big notation in red ink stating "DO NOT CASH THESE CHECKS!" and no embarrassed waitstaff returning to the table and saying to the customer and guests, "Sorry, but this card was declined."
4. The bank protects the customer's quality of life - utilities are not turned off due to non payment, creditors don't call at dinnertime, the cell phone remains on, the baby gets diapers - need I go on?
5. Oh, and the bank? The bank may never see that money again.

Do you REALLY want banks to quit the practice of overdraft protection? Maybe the banks should withdraw this service. Maybe what the average overdrawn customer REALLY needs is to have their phone turned off, their utilities to be cut off, and their credit to be ruined. Maybe their baby doesn't need diapers or formula two days before payday.

Or maybe they should learn to manage their money a little better.

[vandegrasse]

Crime pays for bankers, but not for your average bank robber!

[Sundialsvc4]

Overdraft fees and other penalties have been a multi-billion dollar scam for a dozen years. Transactions are shuffled into the order most favorable to the BANK, not you. Look at the annual reports of your favorite institutions. (Start at the last page and read backward.)

[lib liberal]

The disconnect between the problems facing main street and Washington keep widening. For the past 6 month's we're nothing but talk of regulation, but zero action. What a joke.

good articles... http://www.iamned.com ..

[spinns17]

we dont stand a chance .watch and learn .lol
http://video.google.com/videoplay?docid=7065205277695921912

[spinns17]

told you .lol http://articles.latimes.com/2009/jun/02/local/me-bank-america2

[blueskybigstar]

Reform. Reform. Reform.

[mamacat]

I have a pretty good relationship with a local bank officer. She has made it obvious to me that her bank is trying to gouge those who can least afford it, despite her efforts to prevent it on a case by case basis.

[jemiltd]

Don't loansharking laws apply to banks? Technically they are loaning the consumer money to cover a check or checkcard transaction. I wonder how much of this is deliberately instigated by the banks. When you call to check your balance is it really the balance? Even so, shouldn't there be a limit to how much they charge, isn't 200% or more too much?

[Thinklongterm]

Those banker bastards are at it again!

[Chanel]

Banks making that much money from overdraft fees ALONE is THEFT plain and simple. And sadly, I'm among the ones who got GOT by the banks greedy, greedy, greedy overdraft practices.

[Iccallie]

Money! Money! Money!
America's corruption, greed and thirst for the Almighty Dolla$ will surely bring devastation and unimaginable ruins to this country, if this problems is not corrected.
While this country has a leader who has 'the best interest of The American People at heart' America need to pay close attention and GET ON BOARD.
There have been many warning signs for America to WAKE UP and do the right thing, YET, these signs have been repeatedly ignored. The Rich still want MORE and MORE and want The Poor to have LESS.
The Financial Crises is a final war-cry: A WARNING to remove the shackles of greed that has bound this nation to chaos and disaster.
We still have time to get it together, IF WE WILL. If not, God has all THE POWER necessary to fix everything he sees broken. Hopefully, He won't find it necessary to unleash his anger upon the planet and destroy it.
If GOD decide to hurl the sun onto the earth to show us IT'S TIME to do the right thing. I hope I've already taken my eternal flight. MONEY is not worth experiencing 'The Power of God's Wrath.
I hope America is civilized enough to recognize THE SIGNS OF THE TIMES and not be fooled and deceived by the POWER OF MONEY.

[cjt1957]

Plain and simple, do not write a bad check, and you will not be charged a fee.....

[RaceCondition]

Also: Floss, eat your veggies, and wear your seatbelt.

Useless platitudes that don't take the real world into account. Flossing won't save you from every tooth problem, veggies won't save your life, and wearing your seatbelt will keep your head on your shoulders but won't prevent all injuries.

You're talking about a perfect world. We live in a world where banks squeeze as many cents as they can from their "customers".

[sandiegoconservative]

What are the only two ways you can have an overdraft fee?

1. You spend more money than you actually have, or

2. Bank error, which will be corrected and the overdraft fee waived.

This is the same premise as credit card spending. People spending more than they have. Since when do we find this to be acceptable? I just don't get it anymore.

Flossing won't correct every tooth problem, but not spending more than you have will prevent an overdraft situation.

[Bush-Rolled]

Bong hits 4 Single Payer Healthcare!

[spinns17]

pssssssst these banks are holding the checks to a time when the money is not in there .then they put it through .unless you carry a large balance your going to get hit.they have to make money or face getting shut down .and they have many ways of doing it.

[magicat]

Plain and simple.... criminal.
Banking reform and regulation now!

[feltdizz]

well.. if you don't have it.. don't spend it!

[research]

Yeah, that makes sense, why didn't the Bankster who got 24T$ in bailouts figure that out?

[DianeTreehugger]

So then what does BofA and the other TARP sucklings owe taxpayers in overdrafts?

[DianeTreehugger]

I have long suspected that the bank manipulates the incoming debits to maximize overdrafts. One would think that the debits would hit the account in the order received, but I don't think that's how they work. (Why would they - this does not maximize revenue). Let's say you have $100 in your account. A debit for $25 is received. You can cover this. $75 now available. Now $125 debit comes in. Overdrafted now at -$50.00. One overdraft charge. I think they wait till the end of the day and stack them up exactly how they want: $100 in account, there's $125 debit, overdraft at -$25.00. Oh, look, $25 came in, too. Overdraft at -$50.00. Two overdrafts. Double the revenue. Double your bonus. Double your banking pleasure. Mr. Potter lives!

[Artos]

I with you on this because I have seen it for myself. Lets say we were to all get involved in their scheme to have our funds directly deposited and also to allow them to automatically pay our bills as they come in. just suppose your bill is due on the 1st and your check came in on that same day but has not yet been credited to your account, they will make damn sure that you will be credited with a late payment and charged a fee accordingly even though you never touch your money and everything is being left in the control of the company that pays you or government entity and the Banks. They enjoy these little discrepancies in the time element because it allows them to play God with the Public and get rich at our expense. I will never allow them to pay bills directly at their own discretion. Businesses more than ever are trying to cajole Americans into this plot or theirs. Eventually we'll be dealt with no differently than the old Company Store routine, You only get paid enough to barely survive and everything you make goes right back to our masters who own us.