Opt Out of Predatory Overdraft Fees

chasesucksNew Orleans Finally Congress does the right thing, or at least some of the right things, and passes credit reform legislation, and now we have the spectacle of the federally bailed out banks desperately trying to hoodwink citizen customers into volunteering to allow their pockets to be picked. Banks have been making $40 billion in rip off fees by charging overdraft fees. The new law requires that customers have to volunteer for this so-called “overdraft protection,’ rather than being put into the program by default, so now we have the bums’ rush from the banks to try to keep the hustle alive.

Once upon a time there were just “bounced check” fees. One of the first thing all of us learned when we got a checking account is that we paid the piper if we didn’t either balance our checkbooks (which I didn’t) or at least keep up closely with our cash flow (which I did). The penalty for a mistake was getting an NSF (non-sufficient funds) notice in the mail, having to make good on some payments, having a fee deducted, and living through the embarrassment.

That was then, but not now. The quaint “bounced fee” world only accounts for $6 billion of the take for banks when we overextend past the money in our accounts. And, although I’ve got some beefs here, I’ve got to say that pretty much, “fair is fair.”

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Bank Overdraft Fees

env iconDauphine Island Despite the federal investments in banking now, many of the biggest seem to be accelerating predatory practices particularly around fees.  During normal times working families stretching every penny to pay bills will occasionally bounce a check.  Who hasn’t?

Banks seem to in fact count on us bouncing some checks in order to balance their own accounts.

Recent reports indicate that US banks will collect $38.5 billion in overdraft fees in 2009 (according to Financial Times).

The highest bounced check charges are coming from the federal banks like Citigroup, and Bank of America, JPMorgan Chase.  An account holder bouncing a $10 check could be socked with a $35 penalty.  Oh, and don’t forget to replace the 10 spot.

Don’t bother to ask how much of that charge is pure, grade-A profit, because it’s little but profit in the automated systems of modern banking.  We need some financial justice rather than more fees for NO service.

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