Banks Earn $27 Billion On Debit Card Overdraft Fees

The New York Times:

The Federal Reserve is considering requiring banks to get permission from consumers before enrolling them in overdraft programs, so that consumers like Mr. Means are not caught unaware at the cash register.

Representative Carolyn Maloney, Democrat of New York, would go even further by requiring warnings when a debit card purchase will overdraw an account and by barring banks from running the most expensive purchases through accounts first.

Read the whole story: The New York Times

Comments

[Bart Motes - Huffpost Blogger]

I wrote about this last year: http://www.huffingtonpost.com/bart-motes/why-you-should-never-pay_b_120334.html

[JBGabriel]

Banks like Citigroup are very aggressive on billing late fees. They billed my 93 year old mother $39.00 when she was 2 business days late on making her payment on a $302.00 balance. Citi is also hammering good and responsible credit card account holders with huge increases in their interest rates.

Now, having discussed that issue, I need at this point to come to the defense of the credit card companies and the banks in one area. The U.S. Government has been lax in adopting strict laws which would punish those who hack into computer systems and in other ways steal credit card numbers. The constantly increasing incidents of this kind of fraud are adding to the credit card companies' and bank's costs of doing business.

The following is an article from AOL news:

http://money.aol.com/article/guilty-plea-in-huge-credit-card-scheme/666842

Again, as far as I'm concerned, this guy got off very easily with only a 15 to 20 year time out to think about what he did. Crimes like this strike at the heart of our economic system and need to be crushed. I am sick of these weasles making life miserable for credit card users. Economic terrorism should be treated with LIFE IN PRISON and no parole.

We need to get some tougher leadership in Washington who will get laws passed that will punish severely those who try to setal credit card numbers and other credit card information.

[pokethis]

I've pretty much decided to do away with my debit card and use cash only. It just takes a little more forethought and planning. It also makes balancing the checkbook MUCH easier and I don't have to keep track so much when I just get some cash and work off that. It really simplifies ones life.

[dandypuddin]

This is old news. The banks call this automatic overdraft protection and cover debit charges automatically up to $100 in most cases. Their reason is that they don't want you to be embarrassed if your debit card is declined. HA!

Unless you read the fine print on page 200, you have authorized your bank to overdraw your account for that $3.00 coffee and to charge you $35 in fees. I believe the new credit laws make this illegal and that you will have to OPT IN, not out. I could be wrong though. Until then, call your bank and revoke this intrusion into your account.

[vindrag]

Another scam that the banks are pulling is no longer mailing out mortgage statements. They only email them, and I can't even get Bank of America to do that. The way the scam works is if customers don't get their bills, they tend to forget to pay them or pay late which results in obscene late fees.

[liberal user]

There needs to be more than a backlash. When people who barely survive on welfare break the rules, there are reimbursement bills, penalties, prosecution, and loss of benefits. If Goldman Sachs proportionately met with justice, we would have to stretch our imaginations to determine how they could pay for their astronomical crimes.

good articles 4 for slow news day: http://www.iamned.com

[hulagirrrl]

What I meant to say, is that if the overdraft is a small amount compared to the fee, this would present a very high percentage of finance charges, and the overdraft fee is a finance charge. Sometimes it can happen to the best of us by miscalculating, and the banks should not get away with this high way robbery. So, the more consumers who will fight these charges in small claims courts, the sooner the banks will stop it. We need to pass this information around.

[dandypuddin]

In countries where there is actual banking regulation, the fees charged have to be in proportion to the overdraft amount.

[hulagirrrl]

These overdraft charges are too high. If every one who has a charge of 34 dollars on an overdraft of say 4.0o, should contact the bank, because that interest is too high. Or, go to small claims court. You will not need a lawyer, and the fee is minimal. Most banks will not send a lawyer to the small claims court because their lawyers are too expensive, so they will settle with you and remove the charges.

I saw in an interview where Ralph Nader exactly advised people to do this, and he said, that if every person does this, then eventually the banks will stop charging this fee or they will lobby in Congress to remove the small claims courts.
Good luck.

[Maxiesid]

I have a household account that I keep for small purchases which I never have much money in, but I don't use it much and when I do I watch it carefully. The balance got really low, but I figured I would add more to it on payday four days away. Then a check came through for $12 that someone had held for a month, and they charged me a $35 overdraft... okay, no foul it was obviously my fault... but then they reordered everything in the account, took the check back two weeks and ended up bouncing about ten small purchases (all less than $10). Knowing the banks and they creative way they do their 'accounting'... I had printed out the account ledger with balance every day of those four days I had to wait for payday, and I took it to the bank. It was fraud, pure and simple... the money they had already taken out, that was already accounted for and I had proof, was somehow reordered to make them more money. Since I had proof of their 'creative money management" they had to take it back to the beginning, but they still refused to take the one charge back so I only paid two fees. Still, I closed the account, will use only cash in the future and will buy rechargeable gift cards for online purchases. We can all get together and beat these crooks, but it is going to take a real determined push.

[getsit]

Go to your local credit union or small local bank.

[Social Construct]

This is like being bitten by a vampire covered in leeches; they can never be satisfied.

Too much is never enough with these banks. I'd much rater be embarrassed at the cash register than having to pay 34 bucks for a freaking candy bar.

[Social Construct]

*rather, not "rater." Geez.

[paulbikes]

I'm switching to a credit union.

I thought i was losing my mind when i noticed my transactions changing places, my deposits taking longer, and then longer to post, and my debits moving through faster than they ever have. If you call them up they give you the runaround, tell you to keep your own records (i should) and that both the online banking and a balance inquiry are "not necessarily correct". Some transactions just hang out invisibly and then appear to overdraft my account. I really thought some terrible mistake had happened when i woke up to a drastically overdrawn, and thoroughly fined account. Transactions literally re-arranged out of order and some how im out. No one told me but i guess thats how banks do it now.

I have personal and business accounts with Huntington, but not for much longer. A small business starting to gain traction and balance it's budget doesn't need a bank that charges a 13 cent "service fee", the only fee they have ever given us, the same day we run that account down to .08 cents ordering fabric and materials to fill orders.

[mamacat]

To anyone being victimised by the banks, some advice: RUN! Run to a good credit union, just as fast as you can. There is no need to put up with this behavior, which should be illegal, but is definitely immoral.

[WIpatriot]

I walked into my credit union 30 years ago, mamacat, and I've never looked back.

[robbyJ]

Where are radicals when you need them?

[Tiggy]

Take our retirement, take our tax dollars, take our jobs, take our homes...what the heck take it all after all, you already have.

[sfden50]

Try your local Credit Union - -