This currently normal banking practice now...
While there's no doubt that what you describe is taking advantage of the situation, the customer still has to be dumb enough to exceed their limit and let the bank do that.
Don't be stupid and the bankers can't be dickwads. Simple as that.
Didn't a new law just pass to prevent this kind of fee charging? I mean like just a few weeks ago?
My bank (City National, based in Charleston, WV) still charges $32 per overdraft, and they claim that it's a service that they offer in order to not bounce a check. It can add up if you're not careful.
It is very nice to have that overdraft protection for emergencies. I can take out up to $400 more than I have in my account, and it's no problem as long as the account is brought back to positive within 30 days.
My bank claims to add the deposits before they take out charges and fees. I can't recall if that is true or not because I don't find myself in that situation very often.
Overall, I am happy with my bank.
I don't recall every detail since I have never had it happen, but my bank, Cal National (recently taken over by US Bank) has a policy where if your checking account is overdrawn they will automatically transfer money from your savings to your checking so that you don't have to pay an overdraft fee. I believe it goes up to about $300 or $400. I have been very happy with Cal National ever since I left WaMu/Chase in June due to very poor customer service and an excessive amount of errors the tellers were making on my transactions. Cal National also gives me a much better interest rate.
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LK, my bank (Merimack County Savings) does something similar, but they charge $25. I LOVE dealing with them (and have for years) because they're local, and I get great service.
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I've read that with the way the laws are currently, banks are allowed sign you up for over-drafting (and the fees associated with it) by default, without letting you know you're getting it. So when your average joe believes their card will be declined if there's not enough money to cover their balance, you can see how people get blindsided by the outrageous fees. It's easy to blame the consumer for not watching their balance, but I know of enough people who are forced to live paycheck to paycheck to see how it's so easy to fall into that trap. Especially when banks are doing shady things like crediting your account on Friday for the $50 you deposited on Tuesday, but still processing that $20 you spent on Wednesday on Wednesday.
You can have your bank "turn off" this feature so that your card will be declined if you don't have the funds, but as of now the consumer has to ask specifically for it. I believe the new legislation that goes into effect in the next few weeks changes things so that consumers have to give permission for the overdraft "protection" instead of being enrolled by default.
And then one day you find ten years have got behind you
No one told you when to run, you missed the starting gun
We already have laws establishing when banks need to make funds available to you. Federal Expedited Funds Availability Act. When you deposit a check into a bank, the bank doesn't have the funds immediately. What do they do if they give you access to the funds and then the check bounces?
There should be more disclosure. Banks should tell you up front in plain English how the account will be managed, what fees are, etc. If you don't like what the bank is offering, go to another bank.
Overdrafts should not be automatic. Its a loan and you should need to expressly sign up for it.
That was true before the advent of electronic banking. Today,however, they can transfer the funds the minute you present the check to the teller. The concept of putting a hold on the check untill it "clears" is pure bull. They have the funds, and are making money on it while you are waiting for it to "clear".
CP Chris said:
... It's easy to blame the consumer for not watching their balance, but I know of enough people who are forced to live paycheck to paycheck to see how it's so easy to fall into that trap. Especially when banks are doing shady things like....
Great point. I'll bet that most of the people who the banks ate making billions of dollars a year off of with the overdraft protection fees (I read that somewhere) are those who are living paycheck to paycheck. People with more money will simply have it automatically taken from their savings if they go over.
I used to get in big trouble with my banks because of these fees, but then I learned not to use my card as much. I go to the bank to cash my check, I leave some in my account for bills, and the rest goes into my wallet as cash. I can count my money whenever I want to. When I don't have anymore, I don't spend anymore, unless of course, I have some left over when I get my next check, which happens from time to time.
Another words, I quit playing the game because I always lost. Now that I don't play anymore, I win! :)
I'm not faulting the banks for trying to be profitable. It's a business. But when they are dishonest about it, then it's a problem.
I'd much rather whack a boy band. ;)
I'm not entirely sure that I can blame banks, even for people "living paycheck to paycheck." The rules of banking are pretty straight forward: Don't try to take out more money than you have.
Folks who cannot afford to make financial mistakes are often times the ones making financial mistakes. Of course there is something of a chicken and egg aspect because often times its making financial mistakes that leads to the inability to afford to make them.
With respect to electronic banking, paper checks deposited in banks are batch processed. They are not immediately processed by tellers so the banks do not have the funds the minute you present them to the teller. If they did take the time to process them immediately upon presentment, I suspect folks would complain that it takes too long in line.
I rarely deposit paper checks any more. But when I do, the money is typically available on a non-provisional basis the next day. If folks are depositing checks on Tuesday but not getting credit for the money until Friday, I would suggest looking at other banks.Last edited by GoBucks89, Monday, December 28, 2009 10:50 PM
Yes and yes.
(to the previous two posts)
Why Whack-A-Banker when you can Whack-A-Kittty?
Now that's just adorable. ;)
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Izzinit tho? I love it when that one kitty escapes ;)
I'm not the biggest fan of kitty vids, but that's is really cute!
Actually, cats are wild animals and should not be considered a suitable pet by anyone. They should be locked up in cages like ferrets or hamsters. ;)
(Cat lovers, please note the winkie.)
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