One day I had had a few small charges, and realizing it was a week intl payday, I figured I'd run to the grocery store and make a large precise of groceries, to ensure I had food taken care of, expecting to make s single overdraft.
Suntrust had other plans. They took out the large grocery bill first, meaning a quick lunch at Taco Bell cost over $40, shipping a small box cost over $50, and a Slim Jim and cream soda cost almost $40. In addition to the overdraft on the groceries.
It's a very easy trap to fall into if you're living check to check and make even the slightest mistake.
Our government needs to make it easier to switch to a different bank. Tons of people would leave these awful banks for credit unions and such if it was easy to do. I mean it's possible to switch banks, it's a big headache though. People just have too many other things to worry about right now to deal with headaches like that.
I was originally going to get a Wells Fargo account, but that changed when I decided to go to uni in Florida - before the wachovia merger happened. My father decided that not being able to keep tabs on my account was a dealbreaker, so I ended up getting a USAA account.
Worked out for the best, because USAA has some of the best customer service in the industry.
In each such story online, I've heard a claim that they specifically have algorithms to maximize the penalty fees on these mistakes.
Its another instance of a practice that disproportionately affects the poor. Unless you're living paycheque to paycheque, you would never even bother looking into such niggling details.
Their precious human capital could be used to create further knowledge and advance progress, instead it's used to exploit.
It's For Your Benefit, citizen.
(Also, the cash advance interest differential for credit-cards, which is higher, and only paid off after all other charges are covered, rather than any sort of temporal ordering)
Several banks are being sued at the moment in class action suits for this behavior if I recall correctly. It's an unfair tactic that takes advantage of customers.
So you can end up with overdraft fees despite having enough money in your account!
Go to a bank machine, inquire about your current balance, and then extract cash to make your purchases with.
Banks may be predatory with fees, but really it's your own responsibility to avoid this trap, and it's not even that hard to do. You can also join a credit union.
I used to suffer the same mentality until I finally woke up and started to take responsibility for my own future.
Things happen to victims. Victors make things happen.
But I think it's worth noting, because I'm not sure if I got the point across: I was intending to overdraft on the final, large fee. The insane overdraft fees only affected me in an unexpected way because they go out of their was to also screw people on the order of withdrawals.
The closing date was set to the day that the last scheduled charge was going to hit, and so they gave me my cashier's check with all the funds except the $25 for the last scheduled charge. But there was also going to be a credit for $0.10 in interest on the account (which was necessary to pay the $25 charge.)
Apparently the system was able to calculate all of that properly so that the debit matched up to the funds left in the account on the closing date, but on that day the debit was processed before the 10-cent credit. So they wanted to charge me $75 in fees because of a 10-cent overdraft that their system created!
(1) They agreed, or
(2) You promptly closed your account.
I've not overdrafted since.
It took me two and a half hours to get the charges reversed, 30 minutes of which were spent in the nearest BoFA location until I learned I had to commute around town to go back to the original place I opened my account to even discuss the situation.
Somebody in the marketing and PR department got a bonus for making that shit up. It is like they slap you in the face, then smile at you and ask you how your day is going.
It's the exact type of behavior I would expect from a bank. But let's not swallow everything that the article said. It's not like banks of yesteryear were so magnanimous. Back in the Great Depression, it was the banks that screwed over so many farmers and home-owners that many states, including California, made mortgages non-recourse meaning that banks could only take back the house in the case of foreclosure, something that many people took advantage of during the latest housing boom.
It's the exact type of behavior I would expect
from a bank.
In fact, I have arranged that I actually can't overdraft. Automatic bills just bounce when I'm underfunded. That's between me and the companies whose bills bounced.
* There are no ATM fees levied by another bank's ATMs.
* There are no ATM fees levied by your bank for using another bank's ATMs.
* There are no fees or minimum transactions for using your debit card at a business.
* You are allowed to overdraft, you just pay an interest rate to the bank for the money you owe (mine is 10%, up to €2,500).
* There are no bounced check fees, because:
* There are no checks. Non-debit card transactions are done via online banking, are free, and usually instantaneous.
* All banks use 2-step authentication (phishing is nearly impossible).
I was confronted by the joke of US banking again recently when I had to mail someone in the US a check, which they lost, found 6 months later and cashed... generating an overdraft fee in my US account.
Totally unnecessary.
(I never thought I'd miss the German banks.)
This isn't to absolve any banks, but rather to mock the federal government and their chronic flailing about while trying to control the financial sector(+). It's shades of the same mindset which led to subprime mortgages being subsidized, purchased by the million by Fannie Mae and the FHA. "Banks are a bunch of meanies. They ought to do charity instead."
(+) and this isn't to say that the sector couldn't use a little control, just that the Feds aren't proving themselves very competent at it.
In a sense, yes. But you should rather compare it to the good examples mentioned in Europe, which also have free accounts for poor people. I wonder what those banks do different.
Unless they're also giving you free checks, that's pretty much the cost. A human being will rarely look at anything. Everything is handled by automated computer systems.
I hate feeling like an advertisement for my employer, but I just don't understand why ALL banks can't work this way!
I just don't ever have to pay careful attention to my precise balance, since the interest on a day or two of being $50 "overdrawn" is trivial. And every now and then when some huge auto-bill hits or a check I forgot about gets cashed, it simply clears instead of creating a multi-hour hassle for me to clear up.
This is absolutely no problem for small transactions. For larger, potentially inconvenient ones like bills or rent, I really don't see the possibility. Maybe I'm too careful with my money, but I don't usually try to make large payments without checking my funds first.
That way, if you have a 2 € overdraft for one month, you'd only pay 3 cents of fees. However, if you have 1000 € of overdraft during one year, you'd pay a total premium of 200 €. Seems to make much more sense than a flat fee.
So, if you ask me, the solution to America's woes in this regard is not to eliminate overdraft fees. That's just addressing a symptom. The real solution is a living wage for all Americans, or some other way to prevent poor people from sinking into debt little by little. Then banks wouldn't construct their systems like this, because it just wouldn't work.
Instead of patching bandaids onto the financial system, we need to lift people up from poverty directly. Want to solve overdrafts? Tax the rich and give the money to the poor.
As for BankSimple, that's nice marketing and all, but let's see if BankSimple becomes the bank of the poor. Can anyone get a free bank account with BankSimple and keep $0-$500 in it?
As for BankSimple becoming the bank of the poor, I feel that it wouldn't be that big an issue. They site focuses on integrating technology for pretty much everything you need to do. Check depositing is by smartphone. There are no branches - everything is online/phone based. This will probably deter the poor to sign-up since people who have < $500 balance on their bank account probably aren't going about with a smartphone and a data plan.
Usually when this overdraft sob story is posted to a forum with a call for revolution, it is by someone who is a habitual line skater who is miffed they keep geting caught out.
It only becomes a regulatory issue because it is catastrophic for poor people. But once again, it's just a bandaid regulation if you make the practice illegal, because poor people will remain poor.
Your "extremely small amount of cash" is my families disposable income for the entire month. That is, all we have to live on after tax and direct housing costs.
A simple accident/incident (last year a small section of our roof caved in, the insurance company says it wasn't covered as there wasn't a 'storm') can wipe that amount out easily. It took us several months to afford the repair.
Of course if we'd be living off the state it would have been fixed immediately assisted by our tax payments ...
Heaven forfend we have a single post anywhere that doesn't jive with the bootstraps, fuck-you-got-mine, randroid hivemind mentality.
Sorry for the caps but it cannot be stressed enough.
There is no good reason not to use a credit union - almost everyone in the USA can find one and qualify and since they are member owned they won't do nonsense like this and don't need regulation to force them to do what is morally right.
Right now I keep 95% of my money in investment accounts (I use Interactive Brokers these days, they have reasonable fees for trades and zero bullshit, which puts them two steps ahead of any normal bank that I know of), and push the remaining stuff to a throwaway checking account @BoA as needed to cover recurring payments, bills, etc. I don't have any sort of credit whatsoever, I've always preferred to pay up-front (and yes, this has been a problem, as I've gotten older I've realized that some things, like car rentals, are exceptionally difficult to deal with without a credit card, and getting a credit card is actually somewhat difficult if you skipped it for the first part of your life, and they really don't care how much money you have if you have no credit history...).
Trust me, I'd love nothing more than to know that I was contributing absolutely zero to the consumer banks. But I've never really looked into alternatives; the main reason I use consumer banks is for convenience, like being able to set up bill payments, have a debit card, deposit checks at an ATM, etc. Can credit unions cover those use cases? And can someone like me, who's over 30 but has never borrowed money before, get into one?
I've been in the no credit card boat, so I know exactly what you mean. I got mine by having a car loan I don't really need that my brother cosigned to create a credit history. You may also be able to get a loan from your broker. Mine keeps telling me how big a loan I'm approved for, though I've never tried it.
Here, if you have never had a loan or credit card, never missed a bill payment, have a steady income, then your credit history is perfect. If you want a loan or a credit card, you'll get one instantly.
I have a home mortgage, a student loan, and a credit card I rarely use, and my credit rating is slightly worse than someone who has the same income as me, but no loans or mortgages. But in the US, it would be the exact opposite, I would be the one with a great credit rating, and the other guy would have problems getting a credit card.
So weird. :-)
I might be working in the US in the future, and I'm really dreading having to deal with US banks. I will definitely look into getting an account with a credit union instead.
The downside, at least with my credit union, is that there are zero branches outside the state. When I lived in a different state for 2 years it wasn't a big deal since I could mail them checks for deposit and every store now offers cash back with even the smallest purchase (avoiding ATM fees).
BTW, BofA was the last bank I was ever at and I will tell everyone to avoid them like the plague. Simplifying numbers here, but someone gave me a $500 check that bounced. When the check bounced they took out the $500 (what they should have done), but then put a lock on the other $500 in the account. I went to branch and asked for an explanation. After a few explanations that didn't make any sense I told the manager I wanted to close my account right then and there. He said he couldn't, so I said I wasn't leaving until he did and threatened to call the police and claim theft (I was an idiot college kid at the time). Long story short, he closed the account, gave me a check and I have been a happy CU member ever since.
Idea: You could attempt to construct U, C, and K: U = top of L + bottom of O; C = mirror the top half of G; K = maybe the legs of A + the left of R? If you want me to give it a shot, ping me. Update My attempt, just for fun. Result: http://cl.ly/273o3w1z2d2B3y2A0e1y (I first did this sort of font-less logo-hacking in MS Paint, maybe 14 years ago; then 5 yrs ago in Photoshop: http://cl.ly/0p0k2H3x2V0y3s0r2v25; now, in Acorn.)
Recent Federal regulations require us to re-confirm your enrollment in this valuable service you'd previously been getting with your checking account.
[ YES! Please! ]
[ Remind me later ]
If it's a new policy at one of those, I guess I'm closing my account...
Overseas withdrawal can cost up to £4 and overdraft charges is can go up to £60 Lloyds not to mention they'll decrease your CC limit to £500 when you forgot paying £7.
Banks don't have to offer checking accounts to make money charging interest on loans. I suspect what will happen if the government starts to get into the business of deciding what fees ought to be charged for this or that the banks will start charging a flat fee to have an account.
Once again "advocates" for the poor will end up screwing poor people.
Even if flat fee was considered bad, by taking away the chance for some folks to skate the line and win, that is trivial to fix with a Federal income tax credit. You can argue against that on liberation grounds, but not bleeding heart grounds.
I told them that their systems were faulty, and they told me this was a 'feature' of the account type.
I told them I never asked for such a feature, and expect it to work like every other bank account where it denies transactions based on funds.
They reversed one of the overdraft fees and removed the 'feature' from my account at no cost to me. Now if I don't have funds in my account and try to make a transaction, it gets denied. The way it should be, I haven't paid overdraft fees since then.
I just paid $42.50 for mistakenly giving a $3 refund in Canadian dollars via paypal, when both my paypal and my bank were flush with US funds, the simple fact that I mixed up a currency symbol means that refund now cost me $45.50.
This is one of the reasons I stand behind the bitcoin idea. Fee free banking would be too incredible.
http://www.ingdirect.ca/en/chequing/index.html
cheaper overdraft if you qualify, http://www.banking.pcfinancial.ca/a/products/chequingAccount...
It is amazing to me that people use, or even sometimes prefer, their debit card over a regular credit card.
What did he purchase to have to owe $300? He frequently buys $0.50 candy and $1 chips... at $30 per overdraft... yeah
I got mails asking me to sign up for over-the-limit protection program. I was like, huh? What over-limit? Just decline the charge when the limit has been exceeded. Apparently the CC companies would gladly authorize over the limit charge with a fee. Sneaky.
Having said that, the old "Store your money here so we can lend it to others" business model is not as profitable as it used to be.
Edit: Removed reference to interest rates.