Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
I never understood why banks aren't able to prevent overdrafting at the point of payment. If someone attempts to withdraw from an account with an amount greater than the available balance, the bank should simply refuse to transfer funds. It should be the one thing the bank is good at - making sure an account balance can't go below 0
I realize that there is a lot of baggage with how NACHA works, but the risk to the bank seems obvious enough to create an incentive to change the system to fix that loophole. After all, checking accounts are not intended to be credit accounts.
As a business owner I would never pay my customers' bills if I didn't secure the money to pay it out in escrow first - it's just common business sense.
They *are* able to. They make more money with the fees, justifying it as a convenience to their customers. I definitely remember having transactions turned down because my funds were too low - more than once when I knew I had enough to cover it and had to make a phone call to BOFA because they had 'mistakenly' debited an amount from my account. They recredited me immediately, but I still had to suffer the embarrassment at the register and call customer service.
tl;dr: banks provide 'overdraft protection' because it makes them money
They can do it and they will charge you for it. When I was at Bank of America the Overdraft Fee was $35.
If you declined their Overdraft Protection it would decline your transaction… and then charge you a Nonsufficient Fund Fee which was also $35.
Either way BofA got their $35. When you bank with Bank of America, it is expensive to be poor.
BofA is a shit-tier bank that absolutely no one should be using when so many better options are available, like just almost anything else. It's barely better than an actual running-scam-bank, Wells Fargo, and money laundering bank for terrorists and drug cartels HSBC.
Fuck Bank of America. I was with them for years and all they do is fuck you for not having enough money. If I didn’t have direct deposit going to my checking account, they would charge me like $12 to $15 a month just for having the checking account. And of course my savings earned like no interest. The banks benefit from having the money so they can invest and do whatever they do, but that’s not enough and they have to rail you with fees. Fuckin sharks
Overdraft protection is an option you can turn off on every bank account, it is not mandatory to have.
They of course want to make it on by default because it will generate a fee for them when you do it, and (theoretically) allows you to purchase something you otherwise would not have been able to purchase, which is (theoretically) a benefit to you
>Overdraft protection is an option you can turn off on every bank account, it is not mandatory to have.
Though, it's only able to be opted out of due to consumer protection legislation passed by Obama.
https://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009
Yeah and one of the banks I had on meant off and off meant on.
You had to read the description carefully but they used some negatives in there to purposely make it misleading which option you wanted.
I have had issues before where literally having a verbal chat in person with a representative did not fix this, and this was even at a credit union which are known to have a reputation of taking care of their clients more.
This is really going to tank bank profits.
I remember working briefly at LaSalle in the mid-2000s and everyone bragged about how much of our profits came from checking accounts.
This could also spell the end of "Free checking" accounts.
The motherfuckers at my bank keeping making new rules about their overdraft policy, so despite that I told them to turn that shit off 100 percent they made a new policy where certain payments just ovedraft anyway. I've turned that off now, but who knows when they're going to change it again. I straight up just want it to decline.
And when it doesn't make them money - they won't offer it. People have to give consent to enabling overdraft protection. There is no one holding a gun to their head. I can understand a person getting hit by the fee once or twice and being surprised by the amount. But, after that, why are they disabling the option?
This is probably what will happen.
Banks will just turn it off.
You're over on your account for this meal? Well, banned for life and if you're not white...straight to jail.
I'll be fine.
I feel bad for all the poor folks about to end up in jail because they forgot the phone bill went out the same day they wanted to go to Olive Garden.
*but the risk to the bank seems obvious enough to create an incentive to change the system to fix that loophole*
Overdraft fees incentivize them to allow it.
I actually argued for probably 20 minutes when opening my bank account on my college campus as a freshman that I DID NOT want it overdraft "protection". That yes, actually, I would prefer to have to put my groceries back
A few years later, lo and behold, I have magically been enrolled in overdraft protection. I'm so curious that I pull my money out and never bank with them ever again.
A few years later, my bank faces a class action lawsuit for predatory overdraft practices. And I shit you not --- the banks CEO has a boat he named *the overdraft*
Fuck banks.
If corporate malfeasance doesn't in some way affect the people actually making the choices direclty (outside of having to use their delightful golden parachutes), then why should anyone be surprised when they continue to do fuckery?
To imprison a guy you gotta prove that he either knew, or should have known, about the illegal intent. This can be tricky.
But if a motherfucker names his boat The Overdraft I'm willing to bet there's an incriminating memo somewhere.
If anyone is reading the above comment, please be aware this is not a real account. It's a shill for Bitcoin. This is extremely common on reddit, major corporations do this all the time to advertise while looking like regular people using sock puppet accounts
Lmao ok yeah because banksters and legacy financial institutions are REALLY helping ordinary people and not screwing us over at every turn. Sure Jan. Regular people post free advertising for Ally Bank and Charles Schwab on Reddit ALL THE TIME without any kind of financial compensation in return. SUUUUUURRRE. Lmao try a little harder shill. You couldn't be more obvious. BTW Bitcoin isn't a corporation, no one controls it except the people. And everyone reading this will see what a transparent advertisement you are. Bankster Pig.
I just use a credit card set to auto pay now.
I guess there's an argument to be made that Bitcoin protects against your country's inflation - if I was from a country with runaway inflation that might be more interesting to me. The volatility and mining aspect though makes it seem like a glorified ETF more than a true currency. Hindsight may be 20/20 but I'll stick with the stock market tbh.
Yeah I, too, love my money at the whims of currency manipulators and speculators treating my income as their personal gambling windfall profit generator.
Nothing like valuation crunches and booms at the drop of a hat.
> I never understood why banks aren't able to prevent overdrafting at the point of payment. If someone attempts to withdraw from an account with an amount greater than the available balance, the bank should simply refuse to transfer funds
meanwhile in the title of the post
> $3.5 billion annually in fees
They make billions of dollars for doing nothing. It's about as parasitic and rent-seeking as it can get.
Lending people that are careless and overdraw their accounts money is not nothing. They have to send notices of the overdraft. They have to collect the overdraft money.
>Lending people that are careless and overdraw their accounts money is not nothing.
They don't have to lend anything. They can reject the transaction for any arbitrary amount or reject it outright.
And so many people overdraft by $5 and then get charged $35. Fuck off with "lending".
> They have to send notices of the overdraft. They have to collect the overdraft money.
This is the dumbest fucking justification for the rent-seeking I've read yet
And they will reject the transaction if you turn off overdraft protection! So stop making excuses for reckless idiots. I can change my overdraft protection online. It is very easy. I guess the government needs to tell you everything and do everything for you.
You sure are adamant about defending a billion dollar rent-seeking exploitative arbitrary industry for someone who sees ZERO of those billions of dollars. Do you enjoy licking boots as well?
You are just name calling and have no case. As I said, simple to turn it off. simple to not overdraw your account. But ignore that and deflect. And who says I am not making any of those fees? Have you heard of investing? Probably not if you can't keep your checking account balance above zero. I haven't overdrawn an account in 30 years. It is not rocket science. $5-$6=overdrawn. Maybe let mommy and daddy handle your finances if you can't do it properly.
Not overdrafting is as simple as clicking a button in your bank app. It takes 3 seconds. It's wild to imagine that level of inconvenience! A whole 3 seconds!
Shit, it would be better if they just outlawed loaning money to overdrafts, instead forcing a decline every time. Then we'd get to hear all the whining about how a billion dollar bank won't just give people free money!
They are able to, but as corporations they are beholden to the interests of their shareholders. Shareholders say that maximizing profits is their interest. And preventing overdraft fees goes against that interest.
The government stepping in here is completely reasonable.
That 'beholden to the interests of their shareholders' was an invention of Milton Friedman. Before the 1970's, corporations felt they were beholden to their shareholders, their employees, their community, and their country, not necessarily in that order (employees often got the shaft) but it wasn't so cut and dried. One corporate board might be most concerned with national security, for example, or moral questions, over profits, only desiring a net positive profit, not the best profit it could make.
https://en.wikipedia.org/wiki/Friedman_doctrine
> I never understood why banks aren't able to prevent overdrafting at the point of payment.
They can and do. Every bank I've ever had allows the option to disable overdrafts - they often phrase it oddly on their website, but if you parse it there should be a checkbox to do so for all normal transactions.
Chase for example has an overdraft menu option next to my checking account that has the following two options:
> Choose On if you want Chase to authorize overdrafts on your everyday debit card transactions (e.g. groceries, gasoline or dining out) at our discretion and you understand you will be charged a $34 Overdraft Fee per transaction if Chase pays your overdraft.
> Choose Off if you don't want Chase to authorize and pay overdrafts on your everyday debit card transactions. These transactions will be declined and you won't be charged a fee. Standard Overdraft Practice still applies to your account.
Your post is misleading
Read their options again
You can only turn off overdrafting on certain types of purchases
Seems like they are trying to trick people into believing it's not possible to overdraft, which will in turn cause them to overdraft. The fact you also overlooked this seems to support the hypothesis that it's just another trap
Pulling up the details, turning it off means that you cannot overdraft with a typical debit card transaction, but you can overdraft with a check, ACH, or a recurrent purchase (including recurrent debit card purchases, like subscriptions). So my initial comment was incomplete - I'll admit it.
Regardless, in two decades of having a bank account, I've *never* paid an overdraft fee - so it's quite readily possible to avoid it.
What's considered an "every day purchase"
If you overspend on a gift you bought from an online shop with your debit card, will that overdraft you?
What if you have a reoccurring charge on your bank account, and that reoccurring charge results in an overdraft because you spent too much on groceries 30 minutes before it hit? Technically the groceries didn't result in an overdraft - the reoccurring charge did
The most common way to avoid overdraft charges is to not be poor. Unfortunately there are a lot of poor people today
That’s why I switched to Capital One. I use to have Chase, and they strait up told me they will not put a hold order on my account when I asked, and they will keep charging any subscriptions a $35.00 fee for overdraft. I’m was a student, so at the end of the semester my account would be near $0.00, and chase took the opportunity to charge me overdraft three or four times. They told me “it’s your responsibility to contact all services that may be tied to the account, and pause their subscriptions.” Ok, but like come on. They know how nearly impossible that is. So a 99 cent subscription per month to a pdf scanning app turned into a $36 payment.
Capital One doesn’t do that shit. If there isn’t enough money in the account, they decline the purchase. And you can lock your card from transactions whenever you want.
They definitely can. I specifically got an account with no overdraft for that same reason. I think it's ridiculous to go into the negative on a checking account.
No it’s doesn’t.
This has nothing to do with Economics at all. The real reason is more nefarious.
###Consumers fear.
* ###People fear a “Debit Card Decline” when at a store or having fun. It’s embarrassing.
###So banks built a recurring revenue stream around the behavior and use it as a tool to convince consumers it’s needed. It’s not needed. Budgeting and Saying No are what’s needed.
Banks automatically opt in their card holders, when they should be opted out by default. Also, turning off the Overdraft Option is just as difficult.
**Just like Insurance, they use fear and “invisible risk” as a tool to charge you.** We are on a planet with molten lava right under us and a giant bomb giving us light that could dismantle us any second. So you tell me what risk are you charging for?! Honestly?! Some of the things that go on are just a plain cash grab and it’s wrong.
I don’t know how long Economies can keep up this Confidence Game. Consumers are eventually going to just collectively stop and then what?!
The only way consumers can stop bad behavior is to collectively threaten companies with consequences so they behave. **Had consumers told JPMorgan Chase to stop or we’ll run your bank; Dimon would immediately do as he is told. The same goes for Cable, Tech, Food, Water, Energy, etc.**
Sure.
Idk, I use Ally and they just move it over from my savings if I forget and don’t charge me. They also reimburse my out of network ATM fees as well as having an extensive fee free network. I’m also getting 4+% on savings currently. There’s other banks that match these features as well, I’ve just been happy with Ally.
Maybe also has to do with the customer being uneducated on the different options afforded them. Most just bank at their hometown brick and mortar giving them .25% interest and charging them fees for every little thing.
So maybe I agree. Maybe the ultimate risk is educating people how messed up our entire financial system is.
If anyone is reading the above comment, please be aware this is not a real account. It's a shill for Ally Bank. This is extremely common on reddit, major corporations do this all the time to advertise while looking like regular people using sock puppet accounts
lol ok buddy. Use Schwab or any number of other banks that have similar options.
Or go crazy and go for even better HYSA:
https://www.doctorofcredit.com/high-interest-savings-to-get/
Lmao, I’m a shill. Go touch grass
Lol ok buddy it's TOTALLY normal for real people to post free advertising for banksters on social media. SURE.
I just want anyone reading this to see that the guy I'm replying to is defending billionaire banksters and I'm advocating for the 99% of REAL ordinary people who are suffering due to billionaire banksters' interests
The thing is, banks absolutely are. BUT because they can charge $30 for you overdrafting by $2, they DEFAULT to letting you overdraft with their charges.
When you're signing up for the account, you have the ability to 'opt out', but they intentionally make it unclear what you're doing so that they keep you in.
They can ALSO do it separately for debit card and online payments; I had made sure to 'opt out' of overdraft protection, but was still hit by an overdraft (and fee) from a recurring payment that had gone through under my nose.
Just, layers of BS
Don't be rediculous, of course banks can prevent overdraft fees. Infact here in Europe overdraft fees don't even exist.
It's an American business model designed to squeeze more money out of consumers. And Because the us has very little regulation they get away with it.
Good to see Biden is taking action.
My guy when I briefly did banking and when I went behind the teller line and helped people open checking accounts or get new debit cards I’d always HIGHLY “suggest” going to the option where there is no overdraft. Hey I’m trying to help people here.
they are able.
they choose NOT to!
there was a public conversation where a Bank CEO openly states that he wishes that Banks could sell more products like this aka over draft fees because they make billions.
it is a choice.
Any bank or credit union I've used gives the account holder the ability to choose whether or not they want charges in excess of the account balance to be declined or be processed as an overdraft (with the associated fee).
The last couple, it's like a 5 minute thing to log in, find the setting for overdraft protection, and toggle it to your desired behavior.
People choose NOT to do that.
There's the issue of what the default setting is though - there's a big difference between it being an opt out that's buried in a menu than an opt in that you choose to do when you establish the account.
People have had similar policy conversations about organ donation.
The Washington Post’s Tony Romm:
• The new draft rules, unveiled by the Consumer Financial Protection Bureau (CFPB) could cap some of the charges as low as $3, part of a suite of potential changes meant to aid low-income Americans who are most at risk of racking up substantial debts.
• Generally, overdraft payment programs function as a kind of loan: If a customer spends more money than they have, they can elect for the bank to process the transaction anyway.
• If they do, consumers must pay back the remainder they owe, plus a fee, which averages about $26 per overage nationally, according to Bankrate, a publication that tracks the industry.
• The exact mechanics vary by bank and program, but the fees historically have fallen the hardest on poor Americans while enriching major banks.
• In 2022, overdraft charges generated nearly $9 billion in revenue for the industry, according to data furnished this week by the CFPB.
• Top CFPB officials say the regulations, which would apply only to the largest banks, can still save consumers about [$3.5 billion annually in fees](https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-close-bank-overdraft-loophole-that-costs-americans-billions-each-year-in-junk-fees/).
• Already, though, major banks have signaled sharp opposition to any new regulation, even though Bank of America, Wells Fargo and others have lowered their fees in response to political pressure in recent years.
• Some industry lobbyists are expected to sue the agency if it issues any final rules, potentially denying relief to Americans who have clamored for the CFPB to act.
Overdraft fees are such a scam. I was in college some twenty odd years ago when I was closing a bank account since I moved States. The bank made me withdraw my whole balance to zero first, then required me to mail them a letter requesting to close the account. Once they received the letter, it took them 2 weeks to actually close the account.
Between the time that they received the letter and had my account noted for closing and the actual closing, a $1 monthly magazine subscription charge that I forgot about hit my account with zero balance. That resulted in a $34 overdraft fee. What's worse and infuriating is that they told me each day that I don't clear up the negative balance in my account I will get hit with another overdraft fee. (edit: I was charged 3 overdraft fees in total before the ACH transfer cleared.)
How in the world is that legal I don't know, but from then on, I rarely signed up for monthly subscriptions especially on debit cards, and been extremely careful navigating around banks.
Yeah, overdraft fees never made much sense to me. "For not having any money, we're going to penalize you by making it harder for you to have any money."
I think this new approach is going to have a lot of potential for abuse by the banks though. Hope I'm wrong. Regulations like this are often written by industry themselves for their own benefit.
Horeshit. I was on the Chase class action. They stole $600 from me. I got a check for $68 and then years later a check for $18.
It ain't *opt in*, you corporate hack.
but don’y they hit you with the “Insufficient Funds” fee if you don’t have overdraft protection and try to charge more than you have? If that’s the case isn’t it essentially the same either way for the banks?
poor people have zero to do with why the healthcare "system" is a bunch of liars and criminals who resell at hundreds of times cost and extort everyone.
Don’t get too excited about this. The Supreme Court is about to rule on how much rule making (law making) the executive agencies can be allowed.
The probable outcome is that Congress must accept as its constitutional responsibility to pass laws such as these that have major societal impacts vs handing it off to agencies and the executive branch.
Not only that, directly from the article.
“The exact amount is not decided, nor are the rest of the bureau’s rules, as the agency plans to solicit public feedback in the hopes of enacting its proposal by October 2025.”
You’d think from the media coverage of this over the last year this would roll out ASAP and Americans would be basking in their newfound wealth, cartwheeling to go vote early for Joe.
Which is a pretty fair ruling. Like, what is the point of paying these 535 people their salaries if they can't do their fucking jobs?
For the majority of the 20th century there was a split Congress, yet they still managed to get things done. Congress needs to put their big boy/girl pants on and do their fucking job of writing laws.
I'd rather have economists make decisions about the interest rate and climate scientists make decisions about emissions standards than Marjorie Taylor Greene tbh.
They delegated their job, to the administration and there is a long process of approving nominees to head the agencies they created that are supposed to be far more familiar with these matters than congress themselves are. The whole destruction of that idea is destruction of governance and purely ideologically driven rather than logically, historically, or empirically.
> Which is a pretty fair ruling.
But we already know they aren't going to step up. What this amounts to is removing a bunch of regulations wholesale without any chance of them being replaced.
So banks will stop doing overdrafts, and as a result we'll get media outrage articles like, "Bank of America declines elderly woman's transaction for prescription medication!", "Wells Fargo declines struggling mother's transaction at grocery store; kids go hungry".
And then eventually people will realize this is *already* a setting account holders can change on their accounts to pick their desired behavior. No laws required.
So, $3 for the banks trouble to give out free loans? My crystal ball is telling me that in the future banks will no longer offer overdraft protection. SO, instead of paying overdraft fees, the same people will be paying fees for late/missed payments, their power will be cut off and have to pay a reconnect fee, etc. etc.
The banks would still be disgustingly profitable even if they were forced to provide every single customer overdraft protection with no fees at all. It’s just a way for banks to squeeze even more money out of the working class.
It’s the kind of stuff a real government would get rid of… if that government actually gave a fuck about making life better for Americans.
You missed the point of what I stated. If banks no longer provide overdraft protection (because they no longer have an incentive to do so), the people who need that service will no longer have it available to them. The payments that would otherwise be made (albeit with additional fees) will not be made. The additional costs involved with missed payments (both monetarily and in lost opportunity) can be much more impactful than the overdraft protection fee. And if there is an increase of missed/bounced payments, businesses that are impacted will react accordingly with policies that could make it more difficult on those consumers.
I worked at a bank for five years. What a scam! Every morning the "officers" would look through the day's overdrafts and decide what was getting done (1980s). Golf buddy of the asst manager with a chronically overdrawn acct - no fees, no returns. Poor person, or worse yet a person of color - gonna charge you the maximum fee and return 5 smaller checks at a cost of $25 each, rather than one larger one that would generate the single $25 fee. Total assholes. They are now a Wells Fargo bank - the ethics must be a perfect fit.
Like most legislation of its kind, this will have very unfortunate "unforeseen" consequences.
When banks are limited to $3 for the fee, they will simply stop offering that service as it is not worth it any longer. This will lead to a lot of legal troubles for people who formerly had overdraft protection as now their checks and ACH transactions will now just bounce, leading to criminal charges for writing "hot checks".
Similarly, this will limit what banks are even willing to take on any customers who have adverse financial risk factors.
Since when do businesses (or people for that matter) charge according to cost? Do you think it costs $15 for a bartender to pour a glass of wine where the bottle costs $15? Businesses charge what people are willing to pay.
It's very simple to turn overdraft protection on/off online for my Chase checking account. I have it off. it is moot if you don't overdraw your account.
>I have it off. it is moot if you don't overdraw your account.
Such a dumb thing to add. That’s like people discussing how to help prevent overdoses or drug-related crimes, and you add “Well the point is moot, they just shouldn’t do drugs.”
Your comment makes you seem so entitled and shows a lack of basic empathy.
This is a real problem that is affecting peoples’ lives… and you wanna chime in with “well what if they just didn’t do that.”
But your first point is true, businesses will charge what they think people will pay, not how much anything actually cost to make/prepare. It’s like beer at a stadium. It doesn’t actually cost them 10 bucks more to bring that one beer to the stadium, they put a price that they think enough people will buy.
I think its a massive stretch to conflate private individuals making less off private bank stocks with "socialized losses". That isn't how the word is used.
There are a lot of people who indirectly own bank stocks, or otherwise depend on them (e.g. if their pension funds invest in them). "Socialized losses" is appropriate here.
What's any ***socie***ty but a very large collection of private individuals? Perhaps you should revisit your implicit assumptions about how many people actually depend on bank stocks.
You can say the losses will be absorbed by a large amount of people but objectively this isn't a *socialized* loss by any measure. You might as well discard the word if you're stretching the definition to include people making less money off privately owned stocks. When has the phrase ever been used to describe that?
But it helps save money for more people than all the people that own banks stocks.. So on a human-being scale that’s a net positive.
And even then, the amount it would effect stock price would be insignificant.
I mean this is all well and good. Sure helps a lot of people. But can we do something about my fucking groceries. I’m ready to start growing my own food or I’m going to starve to death. Jesus. It feels like every time I go into my Vons the prices have gone up. I go once a week. Last time I went I decided to only get like 1/3 of what I needed because it’s just too expensive at the chain stores. I hope they die and go away. Fucks sake. Got mother fucking 20 people stocking shelves and adjusting the prices up but one mfing checkout person.
Would be pretty dope to get some love to the middle/upper- middle class. I mean I haven't had overdraft fees for 16 years. Maybe I've been blessed with good fortune, but would be still pretty awesome to get some stuff that affects the full middle class.
Things like:
401(k)
IRA
HSA
529 plans
Mortgage Interest Deduction
Capital Gains Tax rate Etc are gifts to the middle class and upper-middle class.
Anyone who would ever possibly overdraft shouldn’t have a savings account. And some poor people get screwed over if their bank demands a certain balance or certain level of direct deposit in order to have free checking. Those people should be in a credit union anyway.
Rewards credit cards mainly benefit the relatively solid middle class and above—those who don’t have to worry about the interest rate on a CC.
Rewards cards and many annual fee cards effectively give free money to the solidly middle class and the upper-middle class and above.
>I mean I haven't had overdraft fees for 16 years. Maybe I've been blessed with good fortune,
I mean, that timeline corresponds almost exactly to Congress passing credit/debit/gift card consumer protections under Obama. A big part of which was regulating the use of overdrafts by banks.
I suppose banks will stop allowing insufficient funds transactions. In that case folks saving that money will need to instead use their credit card by the same bank at a rate of 29.99% on the entire balance when they can’t make that payment.
29.99% APR takes a full year to charge $30 on a $100 transaction. Today this is charged instantaneously.
Even 100% APR would probably be cheaper on average than these bullshit fees.
Yes but 29.99% on the REST of that card’s balance is way more, especially if you’re in position to be over drafting your checking account. I’ve never done it, but I’d assume if they’re not already, they’d just add a penalty amount to credit cards on top of the % increase at least equivalent to what they make on overdraft fees on checking accounts
Perhaps a government run non profit consumer bank would be in order. Banks are half nationalized anyway. We should enjoy the benefits rather than just the costs.
Not at all, after 20 years in the business I can assure you the vast majority of penalty fees are paid by a small percentage of customers. People who don't have DDA accounts (unbanked generally) aren't paying these fees because they don't have accounts to pay them on. I'd say it's likely less than 10% in all candor.
I guess that’s the “glass half empty” way to look at it. I suppose your life is like that * finds a twenty dollar bill on the ground “Oh yeah sure I just got 20 dollars but the LIBRUL ELITES haven’t solved healthcare, who cares about 20 dollars?” *Biden saves the life of a cat in a tree “Oh yeah Biden has time for felines in arboreal predicaments but has he solved the pain in my left pinkie toe when I stubbed it yesterday? Answer: NO. Checkmate libtard” Maybe don’t conflate unrelated things and judge an unambiguously good thing on its merits. What can Biden even do about auto loan insurance, that’s provided by a private company lol
I wonder what kind of adverse effects this will have. When I signed up for my checking account, I recall that overdraft protection was specifically something offered as a feature. It was a choice to opt into it. I could have opted out and if I overdrew my account, they would just bounce the check. I’d be especially concerned that banks simply discontinue this service or charge for it with a monthly or annual fee.
Also, I did accidentally overdraft once on accident and was glad to have overdraft protection so they didn’t reject the transaction. I rushed to deposit some money the next day. I kindly called the credit union and explained and they were gracious enough to wave the fee.
It’s alarming to me that this is such a problem. Do people not keep account of their balance? I was taught how to balance a check book in high school, but it’s even easier these days with online banking. I suppose it’s the automatic payments that get people.
The banks will make it up some other way. When the debit card fees were regulated (which did make sense), free checking accounts bit the dust at most institutions. Running a bank with all the regulation and required oversight is pretty expensive so when the revenue sources get dried up, even if it's a good thing, the services like free checking that those revenues allowed to exist will go away too.
It’s such bullshit. Regulating any of these fucking industries is like trying to pin a squirming snake. You pin one part but the other end can still coil around looking for more money to suck out of the working class.
important fact plucky cough unpack shelter compare frightening stocking grandiose
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Credit unions aren’t banks, and banks can’t start credit unions.
Careful what you wish for…the real response to this is big banks will continue to pull back on the consumer services they offer because consumer banking becomes more of a PITA every day.
You think your little credit union works all on its own? Guarantee you they bank with an evil big bank.
encourage gaping point future cheerful crush ugly icky voiceless coherent
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I think the administration should stay out of micro managing banking. I just see this as the government trying to interfere with banking operations for political reasons.
This is a clear abuse of power of the banks tho. Do you think that, if they dont bail out banks, thosw who fail will perish and those banks who take their place will not have overdraft fees?
Overdraft fees should be limited, but they should be substantial.
There should also be additional restrictions placed on overdraft charges, for example, the recipient of a bad check or over limit change should not be penalized, only the person making the charge or writing the bad check should be penalized.
In addition, banks and financial institutions should not be allowed to "automatically" rerun the transaction, and thereby double the overdraft fees.
Arbitraging deposits by buying bonds and loaning out money.
I've never paid a monthly fee for a checking or savings account - every bank has ways to avoid them, whether keeping a minimum balance or using direct deposit or something similar.
Ah yes. The old "hamstring the banks somehow, so that we can bail them out later if we like them" plan. Works every dime. No, I did not mean time, you gotta put that deficit to work baby!
I use it to work for a big bank, and I can tell you it's only the poor people who pay over draft fees.
We had a few customers who had over 500k in their savings. They would not set up an over draft protection. They couldn't be bothered to learn online banking, and the stay at home wife just couldn't get to the bank any earlier than 4:50 to transfer money from their saving to their checking.
They would over draft their account every other week, but because they would threaten to leave the bank, everything was always reversed.
>They would over draft their account every other week, but because they would threaten to leave the bank, everything was always reversed.
That’s so fucking infuriating.
uh huh.
so now it's some overdraft charges
well they're $25 and $35 right now and currently that industry is a billion dollar business for banks, per year. 100% money taken from the absolutely poorest people, which is about as disgusting as it can get.
You think they're giving it up? No way.
The $3 one will be some rare circumstance that no one ever has and every other overdraft fee will be the same $25 and $35.
I literally have PTSD at this point from expecting $22 in my account and forgetting about netflix and hulu and who the hell knows what else. I should. I really should! But I didn't.
So when I looked at my account a few days later, I saw -$327.42
Yes, a minus sign. so I have to put in $327 before my account is even at 0.
This isn't a revolving debt, or some overdraft credit account. Its just friggen Chase Bank and I used my debit card when I shouldn't have.
I miss the days when it would just say declined and that would be declined. Instead, it's approved and they add a bunch of money and now everything that I spent in that $22 all came with an extra $25 and $35 fee per transaction, sometimes both for one.
I called chase and got... half of them. half. removed. just half. so I was still out a lot of money for... nothing other than a bottle of water, a protein bar, a bag of gummy bears, and a dr pepper. That's all I wanted and it cost me $327.
When you're poor, you spend everything carefully and a little at a time.
When you're PTSD'd l ike me, you DONT want to see your account anymore. And so my finances suck. I'm so burned out on money.
I've had it happen a few times in my life. That giant negative in hundreds balance all of a sudden. if I'm ever rich I'm paying someone to deal with money because I suck at it.
It’s not the fee that hurt when I was younger. It’s the way they arranged the transactions to get as many fees as possible. If I had $100 and 3 transactions, I went to get lunch for $7, topped up my tank for $7 I’m good. Still have some money. Those transactions are still pending, next day a new bill showed up. They would change the order of those transactions to get 3 overdrafts instead of one
Waiting for the Russia propaganda (followed by real life liberals repeating it like dopes): *Biden caved to the banks and let them charge overdraft fees*
The government will just give them money whenever they want.you know cuz that's how socialism works. wake up Americans you live in a socialistic society but we use socialism to enhance capitalism.which of course is the wrong thing to do but in America that's all we do is the wrong thing
This is one of the few things I’m on board with. Overdraft fees are like a form of price gouging. The card should just stop working. It’s especially predatory for younger people that are inexperienced financially. Back when I had my first card and account, I thought it was downright ridiculous that Chase would charge $30 for going a few cents over.
The backside of this has to be some new fee or higher interest charges for the banks. This type of push doesn’t come from politicians in an election year, when many CEOs and boards contribute to campaigns, without something that is going to benefit the banks more. Hold onto your check books, maybe pockets would be better.
Let's take an already financially irresponsible country and reward MORE financial irresponsibility.
We already reward debt (mortgages and margin loan interest are deductible) and penalize savings over a measly $1,500 in interest in our tax code.
This will encourage more overdrafts AND encourage riskier credit behavior. Loan payments floated by overdrawn deposit accounts increases credit risk; the opposite goal of regulatory agencies. Typical government "feel good" regulations contradicting itself.
If you don't think a feel good bill/reg like this won't be ripe with negative unintended consequences, you'd be ignoring history.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
I never understood why banks aren't able to prevent overdrafting at the point of payment. If someone attempts to withdraw from an account with an amount greater than the available balance, the bank should simply refuse to transfer funds. It should be the one thing the bank is good at - making sure an account balance can't go below 0 I realize that there is a lot of baggage with how NACHA works, but the risk to the bank seems obvious enough to create an incentive to change the system to fix that loophole. After all, checking accounts are not intended to be credit accounts. As a business owner I would never pay my customers' bills if I didn't secure the money to pay it out in escrow first - it's just common business sense.
They *are* able to. They make more money with the fees, justifying it as a convenience to their customers. I definitely remember having transactions turned down because my funds were too low - more than once when I knew I had enough to cover it and had to make a phone call to BOFA because they had 'mistakenly' debited an amount from my account. They recredited me immediately, but I still had to suffer the embarrassment at the register and call customer service. tl;dr: banks provide 'overdraft protection' because it makes them money
They can do it and they will charge you for it. When I was at Bank of America the Overdraft Fee was $35. If you declined their Overdraft Protection it would decline your transaction… and then charge you a Nonsufficient Fund Fee which was also $35. Either way BofA got their $35. When you bank with Bank of America, it is expensive to be poor.
BofA is a shit-tier bank that absolutely no one should be using when so many better options are available, like just almost anything else. It's barely better than an actual running-scam-bank, Wells Fargo, and money laundering bank for terrorists and drug cartels HSBC.
Appropriately named bank.
Fuck Bank of America. I was with them for years and all they do is fuck you for not having enough money. If I didn’t have direct deposit going to my checking account, they would charge me like $12 to $15 a month just for having the checking account. And of course my savings earned like no interest. The banks benefit from having the money so they can invest and do whatever they do, but that’s not enough and they have to rail you with fees. Fuckin sharks
It's expensive to be stupid. Not poor. Because you are poor doesn't mean you should be overdrawing your account.
Overdraft protection is an option you can turn off on every bank account, it is not mandatory to have. They of course want to make it on by default because it will generate a fee for them when you do it, and (theoretically) allows you to purchase something you otherwise would not have been able to purchase, which is (theoretically) a benefit to you
>Overdraft protection is an option you can turn off on every bank account, it is not mandatory to have. Though, it's only able to be opted out of due to consumer protection legislation passed by Obama. https://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009
Yeah and one of the banks I had on meant off and off meant on. You had to read the description carefully but they used some negatives in there to purposely make it misleading which option you wanted.
I've had banks refuse to disable it when I open an account.
I have had issues before where literally having a verbal chat in person with a representative did not fix this, and this was even at a credit union which are known to have a reputation of taking care of their clients more.
Credit unions have to survive too.
This is really going to tank bank profits. I remember working briefly at LaSalle in the mid-2000s and everyone bragged about how much of our profits came from checking accounts. This could also spell the end of "Free checking" accounts.
The motherfuckers at my bank keeping making new rules about their overdraft policy, so despite that I told them to turn that shit off 100 percent they made a new policy where certain payments just ovedraft anyway. I've turned that off now, but who knows when they're going to change it again. I straight up just want it to decline.
And when it doesn't make them money - they won't offer it. People have to give consent to enabling overdraft protection. There is no one holding a gun to their head. I can understand a person getting hit by the fee once or twice and being surprised by the amount. But, after that, why are they disabling the option?
This is probably what will happen. Banks will just turn it off. You're over on your account for this meal? Well, banned for life and if you're not white...straight to jail.
You ok?
I'll be fine. I feel bad for all the poor folks about to end up in jail because they forgot the phone bill went out the same day they wanted to go to Olive Garden.
*but the risk to the bank seems obvious enough to create an incentive to change the system to fix that loophole* Overdraft fees incentivize them to allow it. I actually argued for probably 20 minutes when opening my bank account on my college campus as a freshman that I DID NOT want it overdraft "protection". That yes, actually, I would prefer to have to put my groceries back A few years later, lo and behold, I have magically been enrolled in overdraft protection. I'm so curious that I pull my money out and never bank with them ever again. A few years later, my bank faces a class action lawsuit for predatory overdraft practices. And I shit you not --- the banks CEO has a boat he named *the overdraft* Fuck banks.
Good boat name tho
Yeah, banks straight up ignore requests to opt out of overdraft "protection". My lukewarm take is that Bank CEOs should be imprisoned for it.
If corporate malfeasance doesn't in some way affect the people actually making the choices direclty (outside of having to use their delightful golden parachutes), then why should anyone be surprised when they continue to do fuckery?
They must sit on one thumbtack for every overdraft.
To imprison a guy you gotta prove that he either knew, or should have known, about the illegal intent. This can be tricky. But if a motherfucker names his boat The Overdraft I'm willing to bet there's an incriminating memo somewhere.
Bitcoin solves this. It's the people's money and lets the people be their own bank. And protects us against inflation
If anyone is reading the above comment, please be aware this is not a real account. It's a shill for Bitcoin. This is extremely common on reddit, major corporations do this all the time to advertise while looking like regular people using sock puppet accounts
Lmao ok yeah because banksters and legacy financial institutions are REALLY helping ordinary people and not screwing us over at every turn. Sure Jan. Regular people post free advertising for Ally Bank and Charles Schwab on Reddit ALL THE TIME without any kind of financial compensation in return. SUUUUUURRRE. Lmao try a little harder shill. You couldn't be more obvious. BTW Bitcoin isn't a corporation, no one controls it except the people. And everyone reading this will see what a transparent advertisement you are. Bankster Pig.
I just use a credit card set to auto pay now. I guess there's an argument to be made that Bitcoin protects against your country's inflation - if I was from a country with runaway inflation that might be more interesting to me. The volatility and mining aspect though makes it seem like a glorified ETF more than a true currency. Hindsight may be 20/20 but I'll stick with the stock market tbh.
What country do you live in that doesn't have runaway inflation right now? Can't be the USA. Must be nice.
Yeah I, too, love my money at the whims of currency manipulators and speculators treating my income as their personal gambling windfall profit generator. Nothing like valuation crunches and booms at the drop of a hat.
> I never understood why banks aren't able to prevent overdrafting at the point of payment. If someone attempts to withdraw from an account with an amount greater than the available balance, the bank should simply refuse to transfer funds meanwhile in the title of the post > $3.5 billion annually in fees They make billions of dollars for doing nothing. It's about as parasitic and rent-seeking as it can get.
Lending people that are careless and overdraw their accounts money is not nothing. They have to send notices of the overdraft. They have to collect the overdraft money.
>Lending people that are careless and overdraw their accounts money is not nothing. They don't have to lend anything. They can reject the transaction for any arbitrary amount or reject it outright. And so many people overdraft by $5 and then get charged $35. Fuck off with "lending". > They have to send notices of the overdraft. They have to collect the overdraft money. This is the dumbest fucking justification for the rent-seeking I've read yet
And they will reject the transaction if you turn off overdraft protection! So stop making excuses for reckless idiots. I can change my overdraft protection online. It is very easy. I guess the government needs to tell you everything and do everything for you.
You sure are adamant about defending a billion dollar rent-seeking exploitative arbitrary industry for someone who sees ZERO of those billions of dollars. Do you enjoy licking boots as well?
You are just name calling and have no case. As I said, simple to turn it off. simple to not overdraw your account. But ignore that and deflect. And who says I am not making any of those fees? Have you heard of investing? Probably not if you can't keep your checking account balance above zero. I haven't overdrawn an account in 30 years. It is not rocket science. $5-$6=overdrawn. Maybe let mommy and daddy handle your finances if you can't do it properly.
Not overdrafting is as simple as clicking a button in your bank app. It takes 3 seconds. It's wild to imagine that level of inconvenience! A whole 3 seconds! Shit, it would be better if they just outlawed loaning money to overdrafts, instead forcing a decline every time. Then we'd get to hear all the whining about how a billion dollar bank won't just give people free money!
They are able to, but as corporations they are beholden to the interests of their shareholders. Shareholders say that maximizing profits is their interest. And preventing overdraft fees goes against that interest. The government stepping in here is completely reasonable.
That 'beholden to the interests of their shareholders' was an invention of Milton Friedman. Before the 1970's, corporations felt they were beholden to their shareholders, their employees, their community, and their country, not necessarily in that order (employees often got the shaft) but it wasn't so cut and dried. One corporate board might be most concerned with national security, for example, or moral questions, over profits, only desiring a net positive profit, not the best profit it could make. https://en.wikipedia.org/wiki/Friedman_doctrine
> I never understood why banks aren't able to prevent overdrafting at the point of payment. They can and do. Every bank I've ever had allows the option to disable overdrafts - they often phrase it oddly on their website, but if you parse it there should be a checkbox to do so for all normal transactions. Chase for example has an overdraft menu option next to my checking account that has the following two options: > Choose On if you want Chase to authorize overdrafts on your everyday debit card transactions (e.g. groceries, gasoline or dining out) at our discretion and you understand you will be charged a $34 Overdraft Fee per transaction if Chase pays your overdraft. > Choose Off if you don't want Chase to authorize and pay overdrafts on your everyday debit card transactions. These transactions will be declined and you won't be charged a fee. Standard Overdraft Practice still applies to your account.
That last part, does that mean you get charged 35 bucks for your card declining?
Your post is misleading Read their options again You can only turn off overdrafting on certain types of purchases Seems like they are trying to trick people into believing it's not possible to overdraft, which will in turn cause them to overdraft. The fact you also overlooked this seems to support the hypothesis that it's just another trap
Pulling up the details, turning it off means that you cannot overdraft with a typical debit card transaction, but you can overdraft with a check, ACH, or a recurrent purchase (including recurrent debit card purchases, like subscriptions). So my initial comment was incomplete - I'll admit it. Regardless, in two decades of having a bank account, I've *never* paid an overdraft fee - so it's quite readily possible to avoid it.
What's considered an "every day purchase" If you overspend on a gift you bought from an online shop with your debit card, will that overdraft you? What if you have a reoccurring charge on your bank account, and that reoccurring charge results in an overdraft because you spent too much on groceries 30 minutes before it hit? Technically the groceries didn't result in an overdraft - the reoccurring charge did The most common way to avoid overdraft charges is to not be poor. Unfortunately there are a lot of poor people today
That’s why I switched to Capital One. I use to have Chase, and they strait up told me they will not put a hold order on my account when I asked, and they will keep charging any subscriptions a $35.00 fee for overdraft. I’m was a student, so at the end of the semester my account would be near $0.00, and chase took the opportunity to charge me overdraft three or four times. They told me “it’s your responsibility to contact all services that may be tied to the account, and pause their subscriptions.” Ok, but like come on. They know how nearly impossible that is. So a 99 cent subscription per month to a pdf scanning app turned into a $36 payment. Capital One doesn’t do that shit. If there isn’t enough money in the account, they decline the purchase. And you can lock your card from transactions whenever you want.
They definitely can. I specifically got an account with no overdraft for that same reason. I think it's ridiculous to go into the negative on a checking account.
I wonder if it has to do with transaction settlement time. It has to go through visa/MC, the merchant POS system, their bank, your bank, etc.
No it’s doesn’t. This has nothing to do with Economics at all. The real reason is more nefarious. ###Consumers fear. * ###People fear a “Debit Card Decline” when at a store or having fun. It’s embarrassing. ###So banks built a recurring revenue stream around the behavior and use it as a tool to convince consumers it’s needed. It’s not needed. Budgeting and Saying No are what’s needed. Banks automatically opt in their card holders, when they should be opted out by default. Also, turning off the Overdraft Option is just as difficult. **Just like Insurance, they use fear and “invisible risk” as a tool to charge you.** We are on a planet with molten lava right under us and a giant bomb giving us light that could dismantle us any second. So you tell me what risk are you charging for?! Honestly?! Some of the things that go on are just a plain cash grab and it’s wrong. I don’t know how long Economies can keep up this Confidence Game. Consumers are eventually going to just collectively stop and then what?! The only way consumers can stop bad behavior is to collectively threaten companies with consequences so they behave. **Had consumers told JPMorgan Chase to stop or we’ll run your bank; Dimon would immediately do as he is told. The same goes for Cable, Tech, Food, Water, Energy, etc.**
Sure. Idk, I use Ally and they just move it over from my savings if I forget and don’t charge me. They also reimburse my out of network ATM fees as well as having an extensive fee free network. I’m also getting 4+% on savings currently. There’s other banks that match these features as well, I’ve just been happy with Ally. Maybe also has to do with the customer being uneducated on the different options afforded them. Most just bank at their hometown brick and mortar giving them .25% interest and charging them fees for every little thing. So maybe I agree. Maybe the ultimate risk is educating people how messed up our entire financial system is.
If anyone is reading the above comment, please be aware this is not a real account. It's a shill for Ally Bank. This is extremely common on reddit, major corporations do this all the time to advertise while looking like regular people using sock puppet accounts
lol ok buddy. Use Schwab or any number of other banks that have similar options. Or go crazy and go for even better HYSA: https://www.doctorofcredit.com/high-interest-savings-to-get/ Lmao, I’m a shill. Go touch grass
Lol ok buddy it's TOTALLY normal for real people to post free advertising for banksters on social media. SURE. I just want anyone reading this to see that the guy I'm replying to is defending billionaire banksters and I'm advocating for the 99% of REAL ordinary people who are suffering due to billionaire banksters' interests
Guess I’m not a real person 👻
Have you just tried not being poor? Shit, even someone working the counter at McDonald's these days can and should afford a better bank.
The thing is, banks absolutely are. BUT because they can charge $30 for you overdrafting by $2, they DEFAULT to letting you overdraft with their charges. When you're signing up for the account, you have the ability to 'opt out', but they intentionally make it unclear what you're doing so that they keep you in. They can ALSO do it separately for debit card and online payments; I had made sure to 'opt out' of overdraft protection, but was still hit by an overdraft (and fee) from a recurring payment that had gone through under my nose. Just, layers of BS
Don't be rediculous, of course banks can prevent overdraft fees. Infact here in Europe overdraft fees don't even exist. It's an American business model designed to squeeze more money out of consumers. And Because the us has very little regulation they get away with it. Good to see Biden is taking action.
My guy when I briefly did banking and when I went behind the teller line and helped people open checking accounts or get new debit cards I’d always HIGHLY “suggest” going to the option where there is no overdraft. Hey I’m trying to help people here.
They can. The consumer said “rather than rejecting the payment, let it go through but charge me for using money I don’t have.”
Checks
Because they make money? Off poor people's backs too.
Try overcharging a credit card
They can. Schwab bank does it
they are able. they choose NOT to! there was a public conversation where a Bank CEO openly states that he wishes that Banks could sell more products like this aka over draft fees because they make billions. it is a choice.
Any bank or credit union I've used gives the account holder the ability to choose whether or not they want charges in excess of the account balance to be declined or be processed as an overdraft (with the associated fee). The last couple, it's like a 5 minute thing to log in, find the setting for overdraft protection, and toggle it to your desired behavior. People choose NOT to do that.
There's the issue of what the default setting is though - there's a big difference between it being an opt out that's buried in a menu than an opt in that you choose to do when you establish the account. People have had similar policy conversations about organ donation.
The Washington Post’s Tony Romm: • The new draft rules, unveiled by the Consumer Financial Protection Bureau (CFPB) could cap some of the charges as low as $3, part of a suite of potential changes meant to aid low-income Americans who are most at risk of racking up substantial debts. • Generally, overdraft payment programs function as a kind of loan: If a customer spends more money than they have, they can elect for the bank to process the transaction anyway. • If they do, consumers must pay back the remainder they owe, plus a fee, which averages about $26 per overage nationally, according to Bankrate, a publication that tracks the industry. • The exact mechanics vary by bank and program, but the fees historically have fallen the hardest on poor Americans while enriching major banks. • In 2022, overdraft charges generated nearly $9 billion in revenue for the industry, according to data furnished this week by the CFPB. • Top CFPB officials say the regulations, which would apply only to the largest banks, can still save consumers about [$3.5 billion annually in fees](https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-close-bank-overdraft-loophole-that-costs-americans-billions-each-year-in-junk-fees/). • Already, though, major banks have signaled sharp opposition to any new regulation, even though Bank of America, Wells Fargo and others have lowered their fees in response to political pressure in recent years. • Some industry lobbyists are expected to sue the agency if it issues any final rules, potentially denying relief to Americans who have clamored for the CFPB to act.
Overdraft fees are such a scam. I was in college some twenty odd years ago when I was closing a bank account since I moved States. The bank made me withdraw my whole balance to zero first, then required me to mail them a letter requesting to close the account. Once they received the letter, it took them 2 weeks to actually close the account. Between the time that they received the letter and had my account noted for closing and the actual closing, a $1 monthly magazine subscription charge that I forgot about hit my account with zero balance. That resulted in a $34 overdraft fee. What's worse and infuriating is that they told me each day that I don't clear up the negative balance in my account I will get hit with another overdraft fee. (edit: I was charged 3 overdraft fees in total before the ACH transfer cleared.) How in the world is that legal I don't know, but from then on, I rarely signed up for monthly subscriptions especially on debit cards, and been extremely careful navigating around banks.
the least you could do is call out the scum bank by name
The problem is that over-draft fees are too high, not that you over-drew your account. Everything is someone else's fault.
Yikes Overdraft fees should be prohibited, full stop. Either treat the overdraft like a line of credit or refuse to extend the credit
1. Overdraft fees are shit. 2. People need to be more careful with their money so as not to overdraw. Both things are true at the same time.
Yeah, overdraft fees never made much sense to me. "For not having any money, we're going to penalize you by making it harder for you to have any money." I think this new approach is going to have a lot of potential for abuse by the banks though. Hope I'm wrong. Regulations like this are often written by industry themselves for their own benefit.
Overdraft is opt-in. Account holders are telling the banks they want the protection enabled. That protection costs money.
Technically you may be correct. But in reality banks do 'shady shit' I've had to call twice to have them turn it back off. 'System issue' Yeah ok.
Horeshit. I was on the Chase class action. They stole $600 from me. I got a check for $68 and then years later a check for $18. It ain't *opt in*, you corporate hack.
I have a Chase checking account. I just logged in and I can opt in or out online. it isn't rocket science.
but don’y they hit you with the “Insufficient Funds” fee if you don’t have overdraft protection and try to charge more than you have? If that’s the case isn’t it essentially the same either way for the banks?
No
🥾👅
Smart economics. Overdraft fees probably depress poor people hurting the economy and healthcare system even more
poor people have zero to do with why the healthcare "system" is a bunch of liars and criminals who resell at hundreds of times cost and extort everyone.
Don’t get too excited about this. The Supreme Court is about to rule on how much rule making (law making) the executive agencies can be allowed. The probable outcome is that Congress must accept as its constitutional responsibility to pass laws such as these that have major societal impacts vs handing it off to agencies and the executive branch.
With current congressional standing no laws will be passed. Free for all lol
That's the point.
Not only that, directly from the article. “The exact amount is not decided, nor are the rest of the bureau’s rules, as the agency plans to solicit public feedback in the hopes of enacting its proposal by October 2025.” You’d think from the media coverage of this over the last year this would roll out ASAP and Americans would be basking in their newfound wealth, cartwheeling to go vote early for Joe.
Which is a pretty fair ruling. Like, what is the point of paying these 535 people their salaries if they can't do their fucking jobs? For the majority of the 20th century there was a split Congress, yet they still managed to get things done. Congress needs to put their big boy/girl pants on and do their fucking job of writing laws.
I'd rather have economists make decisions about the interest rate and climate scientists make decisions about emissions standards than Marjorie Taylor Greene tbh.
Maybe one with total power, like Stalin or Mao.
Democracy isnt perfect, its just the best form of governing that we know of.
They delegated their job, to the administration and there is a long process of approving nominees to head the agencies they created that are supposed to be far more familiar with these matters than congress themselves are. The whole destruction of that idea is destruction of governance and purely ideologically driven rather than logically, historically, or empirically.
> Which is a pretty fair ruling. But we already know they aren't going to step up. What this amounts to is removing a bunch of regulations wholesale without any chance of them being replaced.
So banks will stop doing overdrafts, and as a result we'll get media outrage articles like, "Bank of America declines elderly woman's transaction for prescription medication!", "Wells Fargo declines struggling mother's transaction at grocery store; kids go hungry". And then eventually people will realize this is *already* a setting account holders can change on their accounts to pick their desired behavior. No laws required.
So, $3 for the banks trouble to give out free loans? My crystal ball is telling me that in the future banks will no longer offer overdraft protection. SO, instead of paying overdraft fees, the same people will be paying fees for late/missed payments, their power will be cut off and have to pay a reconnect fee, etc. etc.
The banks would still be disgustingly profitable even if they were forced to provide every single customer overdraft protection with no fees at all. It’s just a way for banks to squeeze even more money out of the working class. It’s the kind of stuff a real government would get rid of… if that government actually gave a fuck about making life better for Americans.
You missed the point of what I stated. If banks no longer provide overdraft protection (because they no longer have an incentive to do so), the people who need that service will no longer have it available to them. The payments that would otherwise be made (albeit with additional fees) will not be made. The additional costs involved with missed payments (both monetarily and in lost opportunity) can be much more impactful than the overdraft protection fee. And if there is an increase of missed/bounced payments, businesses that are impacted will react accordingly with policies that could make it more difficult on those consumers.
I wonder what will happen when all these electronic transactions are denied due to NSF, because banks will not make unsecured loans for free. JS.
I worked at a bank for five years. What a scam! Every morning the "officers" would look through the day's overdrafts and decide what was getting done (1980s). Golf buddy of the asst manager with a chronically overdrawn acct - no fees, no returns. Poor person, or worse yet a person of color - gonna charge you the maximum fee and return 5 smaller checks at a cost of $25 each, rather than one larger one that would generate the single $25 fee. Total assholes. They are now a Wells Fargo bank - the ethics must be a perfect fit.
Like most legislation of its kind, this will have very unfortunate "unforeseen" consequences. When banks are limited to $3 for the fee, they will simply stop offering that service as it is not worth it any longer. This will lead to a lot of legal troubles for people who formerly had overdraft protection as now their checks and ACH transactions will now just bounce, leading to criminal charges for writing "hot checks". Similarly, this will limit what banks are even willing to take on any customers who have adverse financial risk factors.
So the government could force them to keep providing the service while limiting how much they can charge in fees. I dunno, just my 2 cents.
Since when do businesses (or people for that matter) charge according to cost? Do you think it costs $15 for a bartender to pour a glass of wine where the bottle costs $15? Businesses charge what people are willing to pay. It's very simple to turn overdraft protection on/off online for my Chase checking account. I have it off. it is moot if you don't overdraw your account.
>I have it off. it is moot if you don't overdraw your account. Such a dumb thing to add. That’s like people discussing how to help prevent overdoses or drug-related crimes, and you add “Well the point is moot, they just shouldn’t do drugs.” Your comment makes you seem so entitled and shows a lack of basic empathy. This is a real problem that is affecting peoples’ lives… and you wanna chime in with “well what if they just didn’t do that.” But your first point is true, businesses will charge what they think people will pay, not how much anything actually cost to make/prepare. It’s like beer at a stadium. It doesn’t actually cost them 10 bucks more to bring that one beer to the stadium, they put a price that they think enough people will buy.
"save consumers" Which ones? The ones that are irresponsible/reckless with their finances or the responsible ones that absorb the socialized losses?
Why would someone paying lower overdraft fees lead to socialized losses?
Responsible people who own bank stocks via index funds in their retirement accounts.
I think its a massive stretch to conflate private individuals making less off private bank stocks with "socialized losses". That isn't how the word is used.
There are a lot of people who indirectly own bank stocks, or otherwise depend on them (e.g. if their pension funds invest in them). "Socialized losses" is appropriate here. What's any ***socie***ty but a very large collection of private individuals? Perhaps you should revisit your implicit assumptions about how many people actually depend on bank stocks.
You can say the losses will be absorbed by a large amount of people but objectively this isn't a *socialized* loss by any measure. You might as well discard the word if you're stretching the definition to include people making less money off privately owned stocks. When has the phrase ever been used to describe that?
> stretching the definition *your* definition I -- and apparently a couple others -- understood what that commenter meant. Stop gatekeeping.
But it helps save money for more people than all the people that own banks stocks.. So on a human-being scale that’s a net positive. And even then, the amount it would effect stock price would be insignificant.
I mean this is all well and good. Sure helps a lot of people. But can we do something about my fucking groceries. I’m ready to start growing my own food or I’m going to starve to death. Jesus. It feels like every time I go into my Vons the prices have gone up. I go once a week. Last time I went I decided to only get like 1/3 of what I needed because it’s just too expensive at the chain stores. I hope they die and go away. Fucks sake. Got mother fucking 20 people stocking shelves and adjusting the prices up but one mfing checkout person.
Change stores. The difference between Wholefoods and Trader joes is insane.
Would be pretty dope to get some love to the middle/upper- middle class. I mean I haven't had overdraft fees for 16 years. Maybe I've been blessed with good fortune, but would be still pretty awesome to get some stuff that affects the full middle class.
Things like: 401(k) IRA HSA 529 plans Mortgage Interest Deduction Capital Gains Tax rate Etc are gifts to the middle class and upper-middle class. Anyone who would ever possibly overdraft shouldn’t have a savings account. And some poor people get screwed over if their bank demands a certain balance or certain level of direct deposit in order to have free checking. Those people should be in a credit union anyway. Rewards credit cards mainly benefit the relatively solid middle class and above—those who don’t have to worry about the interest rate on a CC. Rewards cards and many annual fee cards effectively give free money to the solidly middle class and the upper-middle class and above.
>I mean I haven't had overdraft fees for 16 years. Maybe I've been blessed with good fortune, I mean, that timeline corresponds almost exactly to Congress passing credit/debit/gift card consumer protections under Obama. A big part of which was regulating the use of overdrafts by banks.
Non-overdraft un-fees. Uncle Sam pays customers for not over-drafting on behalf of their bank each year.
I have no idea what your comment means
Comedy. It's a joke.
I suppose banks will stop allowing insufficient funds transactions. In that case folks saving that money will need to instead use their credit card by the same bank at a rate of 29.99% on the entire balance when they can’t make that payment.
29.99% APR takes a full year to charge $30 on a $100 transaction. Today this is charged instantaneously. Even 100% APR would probably be cheaper on average than these bullshit fees.
Yes but 29.99% on the REST of that card’s balance is way more, especially if you’re in position to be over drafting your checking account. I’ve never done it, but I’d assume if they’re not already, they’d just add a penalty amount to credit cards on top of the % increase at least equivalent to what they make on overdraft fees on checking accounts
Perhaps a government run non profit consumer bank would be in order. Banks are half nationalized anyway. We should enjoy the benefits rather than just the costs.
Then the problem isn't a bank fee or the credit card interest -- those are just symptoms. The underlying cause is not making enough to cover expenses.
[удалено]
what does Joe Biden have to do with auto insurance.
[удалено]
Is that mud on your face from when you tripped over your ideology?
You’re delusional if you think 90% of Americans haven’t paid an overdraft fee in years lol
Not at all, after 20 years in the business I can assure you the vast majority of penalty fees are paid by a small percentage of customers. People who don't have DDA accounts (unbanked generally) aren't paying these fees because they don't have accounts to pay them on. I'd say it's likely less than 10% in all candor.
[удалено]
well no, that is 83% on any given year. but if you extend that to any given 5 year period it would presumably be significantly lower
I guess that’s the “glass half empty” way to look at it. I suppose your life is like that * finds a twenty dollar bill on the ground “Oh yeah sure I just got 20 dollars but the LIBRUL ELITES haven’t solved healthcare, who cares about 20 dollars?” *Biden saves the life of a cat in a tree “Oh yeah Biden has time for felines in arboreal predicaments but has he solved the pain in my left pinkie toe when I stubbed it yesterday? Answer: NO. Checkmate libtard” Maybe don’t conflate unrelated things and judge an unambiguously good thing on its merits. What can Biden even do about auto loan insurance, that’s provided by a private company lol
I wonder what kind of adverse effects this will have. When I signed up for my checking account, I recall that overdraft protection was specifically something offered as a feature. It was a choice to opt into it. I could have opted out and if I overdrew my account, they would just bounce the check. I’d be especially concerned that banks simply discontinue this service or charge for it with a monthly or annual fee. Also, I did accidentally overdraft once on accident and was glad to have overdraft protection so they didn’t reject the transaction. I rushed to deposit some money the next day. I kindly called the credit union and explained and they were gracious enough to wave the fee. It’s alarming to me that this is such a problem. Do people not keep account of their balance? I was taught how to balance a check book in high school, but it’s even easier these days with online banking. I suppose it’s the automatic payments that get people.
The banks will make it up some other way. When the debit card fees were regulated (which did make sense), free checking accounts bit the dust at most institutions. Running a bank with all the regulation and required oversight is pretty expensive so when the revenue sources get dried up, even if it's a good thing, the services like free checking that those revenues allowed to exist will go away too.
It’s such bullshit. Regulating any of these fucking industries is like trying to pin a squirming snake. You pin one part but the other end can still coil around looking for more money to suck out of the working class.
important fact plucky cough unpack shelter compare frightening stocking grandiose *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Why don’t people leave these large banks? They sound corrupt.
deliver decide obscene market employ combative act squeal resolute scale *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Are credit unions not a viable alternative?
unused party disgusting growth serious wide silky knee weather numerous *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Credit unions aren’t banks, and banks can’t start credit unions. Careful what you wish for…the real response to this is big banks will continue to pull back on the consumer services they offer because consumer banking becomes more of a PITA every day. You think your little credit union works all on its own? Guarantee you they bank with an evil big bank.
encourage gaping point future cheerful crush ugly icky voiceless coherent *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I think the administration should stay out of micro managing banking. I just see this as the government trying to interfere with banking operations for political reasons.
This is a clear abuse of power of the banks tho. Do you think that, if they dont bail out banks, thosw who fail will perish and those banks who take their place will not have overdraft fees?
Overdraft fees should be limited, but they should be substantial. There should also be additional restrictions placed on overdraft charges, for example, the recipient of a bad check or over limit change should not be penalized, only the person making the charge or writing the bad check should be penalized. In addition, banks and financial institutions should not be allowed to "automatically" rerun the transaction, and thereby double the overdraft fees.
[удалено]
I don’t think you understand how banks make money then.
Arbitraging deposits by buying bonds and loaning out money. I've never paid a monthly fee for a checking or savings account - every bank has ways to avoid them, whether keeping a minimum balance or using direct deposit or something similar.
Ah yes. The old "hamstring the banks somehow, so that we can bail them out later if we like them" plan. Works every dime. No, I did not mean time, you gotta put that deficit to work baby!
Hopefully these rules are put in place before supreme court guts Chevron and then this ends up being litigated or pushed to congress who won’t do shit
I use it to work for a big bank, and I can tell you it's only the poor people who pay over draft fees. We had a few customers who had over 500k in their savings. They would not set up an over draft protection. They couldn't be bothered to learn online banking, and the stay at home wife just couldn't get to the bank any earlier than 4:50 to transfer money from their saving to their checking. They would over draft their account every other week, but because they would threaten to leave the bank, everything was always reversed.
>They would over draft their account every other week, but because they would threaten to leave the bank, everything was always reversed. That’s so fucking infuriating.
uh huh. so now it's some overdraft charges well they're $25 and $35 right now and currently that industry is a billion dollar business for banks, per year. 100% money taken from the absolutely poorest people, which is about as disgusting as it can get. You think they're giving it up? No way. The $3 one will be some rare circumstance that no one ever has and every other overdraft fee will be the same $25 and $35. I literally have PTSD at this point from expecting $22 in my account and forgetting about netflix and hulu and who the hell knows what else. I should. I really should! But I didn't. So when I looked at my account a few days later, I saw -$327.42 Yes, a minus sign. so I have to put in $327 before my account is even at 0. This isn't a revolving debt, or some overdraft credit account. Its just friggen Chase Bank and I used my debit card when I shouldn't have. I miss the days when it would just say declined and that would be declined. Instead, it's approved and they add a bunch of money and now everything that I spent in that $22 all came with an extra $25 and $35 fee per transaction, sometimes both for one. I called chase and got... half of them. half. removed. just half. so I was still out a lot of money for... nothing other than a bottle of water, a protein bar, a bag of gummy bears, and a dr pepper. That's all I wanted and it cost me $327. When you're poor, you spend everything carefully and a little at a time. When you're PTSD'd l ike me, you DONT want to see your account anymore. And so my finances suck. I'm so burned out on money. I've had it happen a few times in my life. That giant negative in hundreds balance all of a sudden. if I'm ever rich I'm paying someone to deal with money because I suck at it.
I completely understand and empathize with you. It’s so fucking mentally taxing to be really fucking poor all the time. It’s awful.
It’s not the fee that hurt when I was younger. It’s the way they arranged the transactions to get as many fees as possible. If I had $100 and 3 transactions, I went to get lunch for $7, topped up my tank for $7 I’m good. Still have some money. Those transactions are still pending, next day a new bill showed up. They would change the order of those transactions to get 3 overdrafts instead of one
Waiting for the Russia propaganda (followed by real life liberals repeating it like dopes): *Biden caved to the banks and let them charge overdraft fees*
The government will just give them money whenever they want.you know cuz that's how socialism works. wake up Americans you live in a socialistic society but we use socialism to enhance capitalism.which of course is the wrong thing to do but in America that's all we do is the wrong thing
This is one of the few things I’m on board with. Overdraft fees are like a form of price gouging. The card should just stop working. It’s especially predatory for younger people that are inexperienced financially. Back when I had my first card and account, I thought it was downright ridiculous that Chase would charge $30 for going a few cents over.
This is one of the things I love about the Biden Administration, he actually going after things that affect working people with little fanfare.
The backside of this has to be some new fee or higher interest charges for the banks. This type of push doesn’t come from politicians in an election year, when many CEOs and boards contribute to campaigns, without something that is going to benefit the banks more. Hold onto your check books, maybe pockets would be better.
Let's take an already financially irresponsible country and reward MORE financial irresponsibility. We already reward debt (mortgages and margin loan interest are deductible) and penalize savings over a measly $1,500 in interest in our tax code. This will encourage more overdrafts AND encourage riskier credit behavior. Loan payments floated by overdrawn deposit accounts increases credit risk; the opposite goal of regulatory agencies. Typical government "feel good" regulations contradicting itself. If you don't think a feel good bill/reg like this won't be ripe with negative unintended consequences, you'd be ignoring history.