Scream if you dislike overdraft fees
The Federal Reserve is considering requiring banks to get customers' consent before enrolling them in their overdraft programs. Danielle Karson reports a majority of customers surveyed don't like being automatically enrolled.
Visa credit card in wallet (David Paul Morris/Getty Images)
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Steve Chiotakis: Well, raise your hand if you'd like to do something about big bank overdraft fees. Yeah, that's what I thought. Today's the deadline for the public to weigh in about proposed changes the Federal Reserve is considering. They're thinking about requiring banks to get customers' consent before enrolling them in their overdraft programs. Right now, nearly all banks sign customers up automatically for those hefty fees automatically. Danielle Karson reports.
Danielle Karson: The Federal Reserve's Web site features hundreds of complaints from people getting slapped with unexpected overdraft fees when they use their debit or ATM cards. A survey by the Center for Responsible Lending finds a majority doesn't want to be automatically enrolled in an overdraft program.
Leslie Parrish: Most people want their debit card transactions to be declined if they would result in an overdraft. Now, you can use your debit care for the smallest of purchases, it will go through, regardless of your account balance and you'll be charged that fee.
The Center's Leslie Parrish says banks rake in more than $17 billion a year in overdraft fees. Banks say customers can easily check their accounts on the Internet or phone.
Parrish: But it's very unfair sometimes. We hear a lot of people have their paycheck deposited into their account; they make a string of debit card purchases, and then find out it won't actually be credited for several days.
The Federal Reserve hopes to decide by summer whether to let customers opt in or out of their banks' overdraft programs.
In Washington, I'm Danielle Karson for Marketplace.
Comments
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From Blytheville, AR, 03/30/2009
I meant largest-to-smallest.
From Blytheville, AR, 03/30/2009
As if overdraft charges were not bad enough, you have to be careful when your bank (BancorpSouth is one) uses a software program to arrange all of the debits in order from smallest to largest to maximize fee income!
03/30/2009
If I opt out of the overdraft fees, the bank will find another way to get my money. I think RBS has an overdraft fee of $38 or more. I think more. I know how crippling this can be because I have hit hard times in the past. I have made financial mistakes, we all do, but I have tried to avoid those mistakes by not using my debit card. I like to have cash in hand at the point of purchase.
I know this philosophy came from an elderly relative who had survived the Great Depression. My elderly relative had also told that "I was responsible for my own actions and that it included my spending habits". I need to be a better accountant for myself but the banks have to learn to go easy on the consumers. Overdraft fees can just kill a pay check and the debts become overdue. My elderly relative told me "When the economy becames bad, spend money but not lavishly. Consumer spending helps to restart a bad economy but do not go broke trying to help the economy". I realize that people who work at the banks have to earn a pay check and the bank has to get money from some where. I have to be more responsible for my spending habits but I refuse to let the bank rob me either.
From Baton Rouge, LA, 03/30/2009
My credit union offers an overdraft line-of-credit which I have found to be a very useful and cost effective alternative. In the event of an overdraft, the excess amount is charged against the line of credit, saving the consumer from NSF and overdraft charges. The consumer is then responsible for paying off the line of credit, which can be accomplished by an on-line account transfer from checking or savings. Currently, there is no additional fee to use the service and it has been very nice to have on occasion. The largest challenge is being approved for the credit line.
03/30/2009
Although, this wouldn't help much, because NSF fees are usually just as much.
However, I think that these fees do need to be looked at. Right now, there are no caps and some are getting ridiculous. People starting out, who usually do no make more than minimum wage, stretching very dollar could face fees that would total what they would make in a day, even if the withdraw/charge was fifty cents over. Naturally, there are fees associated, but when everything is automated, it seems a little ridiculous to charge forty dollars.
I remember when I was starting out, and overdrafts/NSFs do happen. A simple math error can cause it, misplaced receipt, etc.
I recommend most young people to skip checks/debit cards, but with the way many utilities and landlords operate now, it makes it difficult to not have a checking account or debit card.
And now, you have many people trying to live off of unemployment insurance or starting new jobs paying less than ten dollars an hour.
I hope someone sees fit to improve this situation.
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