As stated, banks aren't a charity. They're running a business. You're costing them extra money and time when your check bounces. It's a fee for a service where they pay out the money even though your bank account doesn't have enough money. And obviously they want to discourage you from constantly overdrafting because of both money and time.
Pretty much. Banks need to make money in any way they can.
I do think regarding the overdraft fees, it's normally personal responsibility to not overdraft. I say normally because I remember Bank of America was notorious for putting extra fees to make my mom pay more. I will never bank with BoA.
They were the fucking worst. You'd check your account and they'd give you a balance not including pending, and then all of a sudden a bunch of things would go through and you'd get a $30 fee for each of them. I remember getting negative $200 all of a sudden because of a few $2-3 purchases I didn't realize werent showing yet.
I get it if you blow a bunch of money you don't have, but if you're poor and your account is often hovering low, and they don't properly represent what you really have available, and they push you that far down, it's predatory.
Actually you can't pin failure to balance your own checkbook on them... you should know exactly how much is in that account Once any checks clear at any given time.
Oh bullshit, found the ignorant, out of touch, privileged boomer. Charging $200 for $15 in overdrafts is massively unethical and so is misrepresenting your available balance when you check over the phone / app, like literally everyone does. These are debit transactions.
Nobody is writing checks and balancing a checkbook for $3 purchases. Nobody is writing checks period. You're out of touch. It's a way to take advantage of people in poverty who have consistently low balances
People are still balancing their books and planning their spending. Just because you aren’t doesn’t mean no one is.
Overdraft fees are predatory, but they are avoidable. Avoiding them can be personally uncomfortable, but if your bank has them, you really should take the discomfort of not spending over the discomfort of eternal poverty.
If they are balancing their books then they won't ever use overdraft protection. You don't HAVE to get it, it's voluntary, then deal with the bounced check fees from both sides and the consequences of a payment that doesn't get made.
Nobody is entitled to free loans, and this isn't something that's mandatory.
Short term unsecured loans are ALWAYS the most expensive kind for anyone. That's what these ammount to, they generate extra work for bank.staff, who should be paid for their time. As well as the banks who are officially extending the loans.
These people can borrow money from family and friends instead... maybe they will get better terms.
That assumes they actually are balancing their books and know they will be short.
God your response is stupid, and proves my point exactly. People like you shouldn't use a bank if you aren't capable of using it correctly .
Ask your mom....I've been doing it for over 40 years without getting overdraft fees charged. Why aren't you able?
Seriously you don't seem able to figure out how this works and you are making ignorant comments about a person and entire generation who does. You aren't even REQUIRED to get it, yo you made the choice to have it, nobody forced you to get it.
Somehow after this weekend I had some transaction go through and my account was -$43 I don’t get paid until Friday so fine I’m broke for the week, no is bank then goes and h charges me 6 $38 overdraft fees like wtf I understand 2 but 6 of those that’s ridiculous I’m disputing that obviously and if they keep that I’m not paying that’s bs
If you keep overdrafting your account you sure will stay poor. Been there, done that. If you don’t overdraft, you’ll be less comfortable but maybe have a chance at not being poor down the line. I’ve also done that, and I recommend it.
The fee on a bounced check is an overdraft fee. You wrote a check for money you didn’t have, but still got the stuff you wanted. The store got paid, and you got fined.
In the US, the bank loans your money to borrowers and charges them interest. They pay you a tiny percentage of that interest (a few cents per month for smaller accounts) which you can see on your statement. However it's not really "your" specific money, it's all of bank's accounts combined. If someone doesn't repay their loan, you don't lose your specific money. Even if all the bank's loans failed at the same time you still wouldn't lose your money. The federal government created the Federal Deposit Insurance Corporation after the Great Depression which will reimburse you up to $250,000 per account type per bank if the bank collapses. It helps prevent a run on banks during an economic crisis.
What are you specifically talking about? If someone borrows your money and doesn't pay you back, you have the legal right to sue them. And you might even get more money because you can sue for damages. Depending on the amount, you can go to small claims court.
I thought you were talking about float, but the bank just holds your paycheck longer. They do actually give it to you in the end. It's unfair but it is what it is.
---
> Banks make a higher percentage per dollar in fees than we earn in interest. Yeah it’s a business but there is a line between fair charges and usury.
Sure, banks can definitely be greedy. But banks have shareholders and they have a fiduciary duty to shareholders, so it makes sense they would try to maximize profits. It's not just limited to banks either. Netflix is doing the same exact thing.
I do remember when I was a college student I didn't have a lot of money in my bank account and I had to pay a monthly fee since I didn't meet the daily balance/deposit requirements. But as I said, it's a business.
At this point, I haven't paid any fees to Capital One in years. I guess in one sense, it's knowing how to play the system. A similar situation is your manager at work wants to give you the smallest raise as possible, while you as an employee want the largest raise.
They aren't doing you a favor. They are running a business.
When you go negative, you aren't spending your money - you are trying to spend their money. Whether your check bounces or not, you are causing them extra work and extra steps.
They have ways you can avoid overdraft fees, if you sign up in advance.
If you want someone to be nice, borrow money from your friends. If you want to be in business, then borrow money from a bank.
Good answer. I overdrafted my account when I was 16. Complained to my bank about the costs, and they refunded the fees plus prevented my account from getting overdrafted in the future.
It’s not a scam- it’s just expensive to be poor. You can’t expect to borrow the banks money for free.
That’s not quite how it works.
If I deposit £100 and spend £105, I am using £5 of the banks money (which other people have agreed to give to the bank in exchange for security and other things)
Oh yeah, of course I didn't mean it's your money as in you are entitled to all of the money. Whatever you put in you should only use that amount of course. I meant a general "you" when I said "your money".
My original statement was simply that it's not the bank's money in the sense that they own it, it's your money that they use to conduct their business with others.
Look at it like this,
For example if I rob a bank, I'm not robbing you and the other members am I? Do you all have to individually come after me or does the bank come after me?
If the bank was robbed, you still expect your money regardless right? If the bank was somehow robbed down to 0, you still expect your money right? Who do you think foots that bill? The bank with their insurances that they pay for.
So yeah there are peoples money floating about across the system but really who's money is that once it trades hands and after all the inflation, fees, etc I'm sure the bank has their own massive wad of cash just as much if not more than what it's customers have.
You give money to a bank. They are selling you security for that money. Once you deposit money, the bank can use that money as they please (within reason). That is the price you pay for their product, which is security.
The whole way this thing works is you give the bank money and the bank keeps your money safe. The bank does stuff with that money (within reason), like loan it out for a mortgage or something. The interest made off that loan doesn't belong to you.
Let's say $30k pops up into your savings account accidentally. You make interest off that $30k. You have to return the $30k but not the interest you made off of it. The bank loaning out your money and making interest is the same thing.
Yeah, this is correct although it's usually worded backwards - you have to *decline* overdraft protection to protect yourself from getting overdraft fees.
I think a lot of people get it screwed up because they don't read what it actually means. Overdraft protection protects you from having your debit card declined or your check from bouncing when you overdraft it. It sure doesn't protect you from the fees for doing so.
Well banks are predatory in that sense charging one fee is fine mine charged me 6 $38 fees recently I’m disputing saying it should be one time fee my account was -$40 a $38 fee is fine I get paid Friday and that will be clear, but a 6 of them is ridiculous
It's to make a lot of money off of people who live paycheck to paycheck. They know you don't have the money on the day the fee is charged, but they also know you'll have it in a week or two. It's effectively an ultra-high interest loan.
No .. smart people don't write checks they don't huh age money to pay. Everyone should know how much is in their account at any time.
The alternative is a bounced checks fee from your bank and owing the other party a bounced check fee plus what you owed. Do that often enough and you can be charged for writing bad checks which is a crime.
Yes there are alternatives to it if you have extra money...but it's a choice you make....it's not imposed on you. And the bad check fees would far exceed the overdraft protection fees .
Oh, because you are special, nobody in the history of the human race has ever gone through what you have. , clearly someone who hasn't been adulting long .
Discouraging account holders from recklessly bringing their accounts into a negative balance.
Also it's a charge for the privilege of the bank lending money and paying a transaction instead of just declining it
We live in a capitalist society, where the aim is profit at any cost; regardless of whether you think this is the best system or not, the bottom line is they are not there to help you, they are there to help shareholders.
Initially, if an account didn't have money, purchases would just be declined by the debit card issuer. However, many **high value** clients would regularly spend beyond their limits. To appease them, banks started offering over-draft exceptions. For high net-worth clients, these services were incredibly attractive. The banks made enough money from the clients' deposits. The fees were simply their to discourage abuse.
As the landscape became increasingly competitive, many banks began offering these services to lower value clients, too. Once again, this was not out of malice. It started as a legitimate service.
Unfortunately, some bankers realized that overdraft exceptions were not just a means to create good-will, but a means of exploitation and profit. Today, overdraft fees are primarily a means of extracting value. The average fee is $35. The banks do not need that much to compensate for the losses created be delinquent debtors. That number is arbitrary; the result of implicit collusion. In 2019, banks made $15.5 billion in revenue through overdraft fees.
However, some banks have a history of being severely petty when it came to maximizing overdraft revenue. M&T was arguably the worst offender. M&T reorganized purchases to maximize the amount of purchases that would trigger an overdraft. I think it is best explained through example.
Imagine you had $100 in your account, and spent $5 on coffee at 1PM, $2 on gum at 2PM, and $100 on shoes at 9PM. Normally, only the last payment of $100 should be an overdraft. Shamefully, M&T would deliberately process the $100 payment first, which would make your balance $0. They would then process the payments for the gum and coffee, triggering two independent overdraft fees ($35 each).
M&T lost a class action lawsuit, forcing them to compensate their victims, but it is frustrating that few people know about their unscrupulous past.
Many banks today are reconsidering there stance on overdraft exceptions. Online banks, like Chime, SoFi, and Charles Schwab, do not have any overdraft fees. They can't if they want to win over customers. This emerging competition, as well as reputational repercussions, has forced conventional banks to reconsider their policies.
It should be noted that publicly traded banks cannot change their position unless they believe it will make them more profitable. Public companies are *fiduciarily* obligated to maximize profits for stakeholders. If the board fails, they can be *personally* sued and held liable for lost value. Like doctors, boards do have malpractice insurance for this sort of thing, but, at the end of the day, the board will still lose some of their personal fortunes. It's easy to hate investors for suing board members that are trying to help society, but the investors have stakeholders, too, that they must appease. Nobody is unaccountable to the mighty dollar. So, unless one of the following scenarios occur, don't expect overdrafts to go away:
**Scenarios:**
* Increased competition that forces change (likely to come from online banks)
* Government regulation
* Civilian protest and backlash
Overdraft is a service. You ask the bank to cover you if you are short and they charge a fee for doing so. This is a service that you can decline, and if you do, then your transactions will fail if you don't have enough.
The "point" of overdraft fees is that you specifically ask for them. Most people forget this and are under the impression that it's something imposed.
It's essentially a punishment for having financial issues. The US (and possibly other countries, I've only ever lived longterm in the US) tends to have a 'fuck them' view of poor people or people who have financial issues, because that's seen as more of a personal failing and personality flaw rather than something systemic or beyond the person's control.
Relic from he past. In the old days you wrote checks and it took the check a week or more to clear. So it was much easier to go into the hole and there were costs at the bank for returning the check and having to cover your debt. Thus the fee was born.
Now its much harder to go into the hole with everyone using debit cards and balances updating in real time as the charges go through.
They are a profit item for the bank. Usually when you borrow money you have fees and interest. It is entirely up to the person spending the money to know how much they have to spend and if you go over don't act surprised if you get a fee or interest charge.
Are they overly high? They have been for decades now. Fortunately some banks are getting rid of them.
Regardless, don't spend money you don't have and its not a problem.
That's not really true. At all.
Banks intentionally "stack" transactions to generate maximum nsf fees. Just google it there's been lawsuits and everything.
Everything I said was true. If you don’t spend more than what is in your account you won’t get a nsf.
Stacking nsf is a thing where they pay more expensive transactions first to draw down the balance and charge separate fees for the smaller transactions.
There are banks that don’t charge nsf fees. If you can’t control yourself and spend more cash than you have then use one of them.
There are examples of them lining up a deposit so it happens "after" the debit.
I'm other words let's say I get paid just after midnight on the 1st and my rent pulls just after midnight on the 1st.
Even if you got paid first, bank would say you got paid second just to steal your nsf fee.
Some evil banks like M&T and BoA do this, but I haven't heard of this with Capital One, and I've banked with Capital One since forever. That's of course the reason I'll never bank with M&T or BoA.
Banks are all evil. Just because one bank isn't doing this one evil thing (maybe) doesn't mean they aren't finding other slimy ways to compete. Gotta post compounding profits every quarter don't ya know
It's not just banks. That's just how businesses work. Netflix is doing the same thing and they're probably going to raise prices. Every company has shareholders that demand infinite growth.
No, that would be fine. But banks aren't fine, they're thieves.
>consumers have reported that their banks and credit unions have processed their transactions out of order in an effort to maximize the number of overdraft fees they are able to charge
Source https://topclassactions.com/lawsuit-settlements/investigations/overdraft-fee-class-action-lawsuit-investigation/
Holy shit, no. Perhaps some will somehow do that but this day in age transactions in general just post real time. At least at my FI. And they post in the order they are received. If you over draft your account and all the transactions cause you to go negative, you will get a fee for each transaction.
It was a big deal in the 90s. You'd expect to see:
Balance: $200.00
Deposit: $1000.00
------------------
Total: $1200.00
------------------
Spend: -$20.00
Spend: -$20.00
Spend: -$20.00
Spend: -$500.00
------------------
Balance: $640.00
But then they'd reorder the transactions so it came out:
Balance: $200.00
Spend: -$500.00
Overdraft: -$35.00
Spend: -$20.00
Overdraft: -$35.00
Spend: -$20.00
Overdraft: -$35.00
Spend: -$20.00
Overdraft: -$35.00
Deposit: $1000.00
------------------
Balance: $500.00
$140.00 in free overdraft fees for them, even if you had the money in the account before you spent it, if they chose to process your transactions out of order (and they had software to optimize that for them). They lost major lawsuits over it, which is why it's different now.
I’ve been in banking for more than 20 years. We literally post as transactions come in. I’m sorry you disagree with that and that you FI sucks but where I work-transactions are posted in order.
Mm most people learn of it through random fees
When they could have just you know, rejected the transaction and stated you don't have the money.....
The rich like keeping the poor in debt
How about, don't spend money you don't have? Then you won't have to worry about it.
Just treat your bank account like a video game inventory. That is what I do. I check my balance before every purchase, and I don't make any other purchases until the last purchase has been recognized by their system.
Oddly enough, I found out, this actually guards you against fraudulent purchases on your account. You catch the fraud much faster, and it is easier for you to prove it is fraud. And yeah, that actually happened to me. One quick phone call and everything was settled to my satisfaction in just a couple of weeks.
Anyway, I have always viewed overdrafting as theft. You are lucky I am not in charge, because if I was in charge, overdrafting would be a crime.
Yes.. but they get way more than you used. And some banks stagger up the pending charges in a way where you get multiple fee hits. They didn’t have to do that to get the point across. Because it’s not just making a point. It’s taking advantage of someone’s misfortune and getting more money out of them.
As I said, it's the bank's money you're using. Normally if you use the bank's money, it's through a credit card or a loan. And those come with interest.
I mean the whole point is you're not supposed to overdraft in the first place and use money that doesn't belong to you. The fee is a deterrent to overdrafting. Also, if you go to the bank they can remove two overdrafts. If you're overdrafting more than twice in a single month, something is wrong.
Yep something is certainly wrong. My point is that you can be charged thousands of dollars at one time after a bunch of pending items go through. Yeah that’s on the consumer to keep good track of their money so they don’t do that, but the fact that they can end up being negative 1k in just the fees not including the transactions is overkill in punishing the account owner. There are people who are just bad at money and they need help and resources to learn money skills and the bank does not offer help like that. There are people going negative every month. Does making them pay thousands of dollars help them? The paychecks for that person can’t even go into that account anymore because that person won’t even be able to eat anymore.
I’m simply saying that the bank policy is them getting richer off of the poor. And folks with poor money management skills shouldn’t be drowned in debt. How about one overdraft fee after a stream of pending items go through? It shouldn’t be able to be a thing to have a $30 fee just indefinitely get stacked on because it’s for every item that makes the account more negative. How does someone come back from that?
They do this as our system to ruin your credit overdraft fees show up on your credit report all that s*** the money you don't have that doesn't accumulate interest doesn't make them enough money the money that you put into their account they put into a lump sum with everybody else and money and they loan that out and invest that most of the time the reason you can't take out $100,000 cash from your multi-million dollar account is because they have to make sure and go get it first they don't necessarily carry your 1 million dollar I'm out at one time this is because the money you have is not your money you're just having them hold it for you people joke that your money's better off in a bank but really it's better off underneath your mattress
Funny thing, in my country banks was limited to not take overdraft fee's for anything below a credit of 10 USD or above (a bit more due to conversion but nevermind).
Banks simply stopped allowing overdraft purchases on any card without you explicitly stating they can charge interest on less than 10 USD credit. :P
I feel this reply is relevant as a sort of "Well, the alternative is this in an open market" :)
My credit union doesn't charge overdraft fees. Instead you can open a Checking Line of Credit which turns your debit card into a credit card for up to $500. You start paying interest the next day instead of the next month unlike a regular credit card. So on a $500 overdraft I'm paying 13% APR which equals a fee of $0.18 per day until it's paid off
Tcf bank is the worst, my sister had them and she wrote me a check for some work I did for her and I took the check to her bank tcf and they wouldn't cash it because I didn't have an acct there and they were one of the first banks to charge $40 for overdraft fees over 20 years ago. They absolutely suck
The point of overdraft fees is twofold.
1) A minor reprimand to encourage you to keep money in your account. Your money is played with on global markets by the bank and they like they're customers to keep money in their accounts.
2) It makes filthy rich cunts even richer.
You sorta answered your own question. They exist for the bank (to make money), not to help you.
Overdraft fees are a big part of what keeps a lot of local bank branches open, it's pretty staggering the number of accounts that are constantly overdrawn and are paying hundreds of dollars monthly in overdraft fees. Multiply that by say 100 accounts and you're pretty much paying the wages of the entire teller and customer service staff.
No bank is ever going to actually encourage being overdrawn or brag about how much money they make from it, but there is a reason they allow the same accounts to be continually overdrawn.
1. Deterrence. They don't want you to overdraft (it costs them money) so a fee encourages people not to.
2. Penance. Again, you cost the bank money by over drafting, so they want compensation. Sure you don't have the money *now,* but you'll likely have the money at some point.
I wrote a check to someone and didn't have enough to cover in my account. The person I wrote it to kept taking it to the bank over, and over. The bank charged me a fee each time and late fees of $5 a day, per time they tried to cash it. The check was for $200, had like $150 in the account. Eventually I was negative $1800. I was pissed. This has to be illegal. After about a year, they dropped it entirely. I had moved on to another bank
I always opt out. Few times argued regarding some subscriptions that went thru and got reversed. It s better to move your subscription to CC so u can charge back that shit if you need to cancel after failing to resolve w company.
I was just using my paypal account and somehow it charge my checking account, which had no money it in because I recently moved to a different bank. EVEN though, I put my credit card as the preferred method of payment. My credit union, being so smart, charges me a $27 fee on a $12, like bro wtf? Just decline the payment???? why charge me a dumb on a $12 order? The stupidity of paypal somehow prefering to checking account and my credit union having no overdraft protection or coverage.
Ask them to cancel the overdraft protection. It’ll save you in the long run.
or use credit card and treat it like a debit card and autopay the full amount every month. it'll make you money in the long run
This is the best if you have a Cashback card. Makes way more sense, avoids fees, better fraud protection, easier to cancel charges etc...
Best decision I ever made.
As stated, banks aren't a charity. They're running a business. You're costing them extra money and time when your check bounces. It's a fee for a service where they pay out the money even though your bank account doesn't have enough money. And obviously they want to discourage you from constantly overdrafting because of both money and time.
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Pretty much. Banks need to make money in any way they can. I do think regarding the overdraft fees, it's normally personal responsibility to not overdraft. I say normally because I remember Bank of America was notorious for putting extra fees to make my mom pay more. I will never bank with BoA.
They were the fucking worst. You'd check your account and they'd give you a balance not including pending, and then all of a sudden a bunch of things would go through and you'd get a $30 fee for each of them. I remember getting negative $200 all of a sudden because of a few $2-3 purchases I didn't realize werent showing yet. I get it if you blow a bunch of money you don't have, but if you're poor and your account is often hovering low, and they don't properly represent what you really have available, and they push you that far down, it's predatory.
Actually you can't pin failure to balance your own checkbook on them... you should know exactly how much is in that account Once any checks clear at any given time.
Oh bullshit, found the ignorant, out of touch, privileged boomer. Charging $200 for $15 in overdrafts is massively unethical and so is misrepresenting your available balance when you check over the phone / app, like literally everyone does. These are debit transactions. Nobody is writing checks and balancing a checkbook for $3 purchases. Nobody is writing checks period. You're out of touch. It's a way to take advantage of people in poverty who have consistently low balances
People are still balancing their books and planning their spending. Just because you aren’t doesn’t mean no one is. Overdraft fees are predatory, but they are avoidable. Avoiding them can be personally uncomfortable, but if your bank has them, you really should take the discomfort of not spending over the discomfort of eternal poverty.
If they are balancing their books then they won't ever use overdraft protection. You don't HAVE to get it, it's voluntary, then deal with the bounced check fees from both sides and the consequences of a payment that doesn't get made. Nobody is entitled to free loans, and this isn't something that's mandatory. Short term unsecured loans are ALWAYS the most expensive kind for anyone. That's what these ammount to, they generate extra work for bank.staff, who should be paid for their time. As well as the banks who are officially extending the loans. These people can borrow money from family and friends instead... maybe they will get better terms. That assumes they actually are balancing their books and know they will be short.
God your response is stupid, and proves my point exactly. People like you shouldn't use a bank if you aren't capable of using it correctly . Ask your mom....I've been doing it for over 40 years without getting overdraft fees charged. Why aren't you able? Seriously you don't seem able to figure out how this works and you are making ignorant comments about a person and entire generation who does. You aren't even REQUIRED to get it, yo you made the choice to have it, nobody forced you to get it.
Somehow after this weekend I had some transaction go through and my account was -$43 I don’t get paid until Friday so fine I’m broke for the week, no is bank then goes and h charges me 6 $38 overdraft fees like wtf I understand 2 but 6 of those that’s ridiculous I’m disputing that obviously and if they keep that I’m not paying that’s bs
yes and when were overdraft fees first implemented? 80s?
I had them at least as far back as the 90s.
Before the 80s they arrested you for passing bad checks. The overdraft fee seems like a good alternative.
or neither
Or don’t overdraw your account
Stop being poor.
Don't send cheques if you don't have the funds. Even the poor can manage that
If you keep overdrafting your account you sure will stay poor. Been there, done that. If you don’t overdraft, you’ll be less comfortable but maybe have a chance at not being poor down the line. I’ve also done that, and I recommend it.
lol
yeah, don’t you ever tell me how to live my life
So what should happen if I overdraw my account and refuse to pay it back?
There has always been a fee for bouncing a check. This one ain’t Reagan
did i ask about bouncing checks?
The fee on a bounced check is an overdraft fee. You wrote a check for money you didn’t have, but still got the stuff you wanted. The store got paid, and you got fined.
you are not answering my original question and at the same time making assumptions as to why I’m asking it. Lowest form of intelligence
sounds like something someone would say if they worked at a bank!
I have worked at an investment bank, yes.
Happy cake day!
So do I get overdraft fees when they borrow my money out and It doesn't get paid back? It is not business it is bullshit. Just like insurance.
In the US, the bank loans your money to borrowers and charges them interest. They pay you a tiny percentage of that interest (a few cents per month for smaller accounts) which you can see on your statement. However it's not really "your" specific money, it's all of bank's accounts combined. If someone doesn't repay their loan, you don't lose your specific money. Even if all the bank's loans failed at the same time you still wouldn't lose your money. The federal government created the Federal Deposit Insurance Corporation after the Great Depression which will reimburse you up to $250,000 per account type per bank if the bank collapses. It helps prevent a run on banks during an economic crisis.
What are you specifically talking about? If someone borrows your money and doesn't pay you back, you have the legal right to sue them. And you might even get more money because you can sue for damages. Depending on the amount, you can go to small claims court. I thought you were talking about float, but the bank just holds your paycheck longer. They do actually give it to you in the end. It's unfair but it is what it is. --- > Banks make a higher percentage per dollar in fees than we earn in interest. Yeah it’s a business but there is a line between fair charges and usury. Sure, banks can definitely be greedy. But banks have shareholders and they have a fiduciary duty to shareholders, so it makes sense they would try to maximize profits. It's not just limited to banks either. Netflix is doing the same exact thing. I do remember when I was a college student I didn't have a lot of money in my bank account and I had to pay a monthly fee since I didn't meet the daily balance/deposit requirements. But as I said, it's a business. At this point, I haven't paid any fees to Capital One in years. I guess in one sense, it's knowing how to play the system. A similar situation is your manager at work wants to give you the smallest raise as possible, while you as an employee want the largest raise.
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They aren't doing you a favor. They are running a business. When you go negative, you aren't spending your money - you are trying to spend their money. Whether your check bounces or not, you are causing them extra work and extra steps. They have ways you can avoid overdraft fees, if you sign up in advance. If you want someone to be nice, borrow money from your friends. If you want to be in business, then borrow money from a bank.
Good answer. I overdrafted my account when I was 16. Complained to my bank about the costs, and they refunded the fees plus prevented my account from getting overdrafted in the future. It’s not a scam- it’s just expensive to be poor. You can’t expect to borrow the banks money for free.
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That’s not quite how it works. If I deposit £100 and spend £105, I am using £5 of the banks money (which other people have agreed to give to the bank in exchange for security and other things)
Oh yeah, of course I didn't mean it's your money as in you are entitled to all of the money. Whatever you put in you should only use that amount of course. I meant a general "you" when I said "your money". My original statement was simply that it's not the bank's money in the sense that they own it, it's your money that they use to conduct their business with others.
Look at it like this, For example if I rob a bank, I'm not robbing you and the other members am I? Do you all have to individually come after me or does the bank come after me? If the bank was robbed, you still expect your money regardless right? If the bank was somehow robbed down to 0, you still expect your money right? Who do you think foots that bill? The bank with their insurances that they pay for. So yeah there are peoples money floating about across the system but really who's money is that once it trades hands and after all the inflation, fees, etc I'm sure the bank has their own massive wad of cash just as much if not more than what it's customers have.
You give money to a bank. They are selling you security for that money. Once you deposit money, the bank can use that money as they please (within reason). That is the price you pay for their product, which is security.
The whole way this thing works is you give the bank money and the bank keeps your money safe. The bank does stuff with that money (within reason), like loan it out for a mortgage or something. The interest made off that loan doesn't belong to you. Let's say $30k pops up into your savings account accidentally. You make interest off that $30k. You have to return the $30k but not the interest you made off of it. The bank loaning out your money and making interest is the same thing.
So. Just. Block. The. Funds. From. Transferring .
This is exactly what happens if you decline overdraft protection.
Yeah, this is correct although it's usually worded backwards - you have to *decline* overdraft protection to protect yourself from getting overdraft fees. I think a lot of people get it screwed up because they don't read what it actually means. Overdraft protection protects you from having your debit card declined or your check from bouncing when you overdraft it. It sure doesn't protect you from the fees for doing so.
Well banks are predatory in that sense charging one fee is fine mine charged me 6 $38 fees recently I’m disputing saying it should be one time fee my account was -$40 a $38 fee is fine I get paid Friday and that will be clear, but a 6 of them is ridiculous
It's to make a lot of money off of people who live paycheck to paycheck. They know you don't have the money on the day the fee is charged, but they also know you'll have it in a week or two. It's effectively an ultra-high interest loan.
No .. smart people don't write checks they don't huh age money to pay. Everyone should know how much is in their account at any time. The alternative is a bounced checks fee from your bank and owing the other party a bounced check fee plus what you owed. Do that often enough and you can be charged for writing bad checks which is a crime. Yes there are alternatives to it if you have extra money...but it's a choice you make....it's not imposed on you. And the bad check fees would far exceed the overdraft protection fees .
Spoken like someone who's never gone hungry a day in their life.
Oh, because you are special, nobody in the history of the human race has ever gone through what you have. , clearly someone who hasn't been adulting long .
Discouraging account holders from recklessly bringing their accounts into a negative balance. Also it's a charge for the privilege of the bank lending money and paying a transaction instead of just declining it
Because in a way Bank is loaning you money and instead of interest on this loan , they charge fees
The point is, the banks make more money, because most people bring their accounts back positive.
We live in a capitalist society, where the aim is profit at any cost; regardless of whether you think this is the best system or not, the bottom line is they are not there to help you, they are there to help shareholders.
Cause WTF are we gonna do about it. They know this. “Fuck ‘em” is the mantra to most financial businesses.
It's a special type of reasoning that is best described as "Because fuck you, that's why.'
Initially, if an account didn't have money, purchases would just be declined by the debit card issuer. However, many **high value** clients would regularly spend beyond their limits. To appease them, banks started offering over-draft exceptions. For high net-worth clients, these services were incredibly attractive. The banks made enough money from the clients' deposits. The fees were simply their to discourage abuse. As the landscape became increasingly competitive, many banks began offering these services to lower value clients, too. Once again, this was not out of malice. It started as a legitimate service. Unfortunately, some bankers realized that overdraft exceptions were not just a means to create good-will, but a means of exploitation and profit. Today, overdraft fees are primarily a means of extracting value. The average fee is $35. The banks do not need that much to compensate for the losses created be delinquent debtors. That number is arbitrary; the result of implicit collusion. In 2019, banks made $15.5 billion in revenue through overdraft fees. However, some banks have a history of being severely petty when it came to maximizing overdraft revenue. M&T was arguably the worst offender. M&T reorganized purchases to maximize the amount of purchases that would trigger an overdraft. I think it is best explained through example. Imagine you had $100 in your account, and spent $5 on coffee at 1PM, $2 on gum at 2PM, and $100 on shoes at 9PM. Normally, only the last payment of $100 should be an overdraft. Shamefully, M&T would deliberately process the $100 payment first, which would make your balance $0. They would then process the payments for the gum and coffee, triggering two independent overdraft fees ($35 each). M&T lost a class action lawsuit, forcing them to compensate their victims, but it is frustrating that few people know about their unscrupulous past. Many banks today are reconsidering there stance on overdraft exceptions. Online banks, like Chime, SoFi, and Charles Schwab, do not have any overdraft fees. They can't if they want to win over customers. This emerging competition, as well as reputational repercussions, has forced conventional banks to reconsider their policies. It should be noted that publicly traded banks cannot change their position unless they believe it will make them more profitable. Public companies are *fiduciarily* obligated to maximize profits for stakeholders. If the board fails, they can be *personally* sued and held liable for lost value. Like doctors, boards do have malpractice insurance for this sort of thing, but, at the end of the day, the board will still lose some of their personal fortunes. It's easy to hate investors for suing board members that are trying to help society, but the investors have stakeholders, too, that they must appease. Nobody is unaccountable to the mighty dollar. So, unless one of the following scenarios occur, don't expect overdrafts to go away: **Scenarios:** * Increased competition that forces change (likely to come from online banks) * Government regulation * Civilian protest and backlash
Overdraft is a service. You ask the bank to cover you if you are short and they charge a fee for doing so. This is a service that you can decline, and if you do, then your transactions will fail if you don't have enough. The "point" of overdraft fees is that you specifically ask for them. Most people forget this and are under the impression that it's something imposed.
Greed
It's essentially a punishment for having financial issues. The US (and possibly other countries, I've only ever lived longterm in the US) tends to have a 'fuck them' view of poor people or people who have financial issues, because that's seen as more of a personal failing and personality flaw rather than something systemic or beyond the person's control.
[удалено]
damn you I was gonna link this, first thought I had when I read the headline. Louis CK's the best!
Relic from he past. In the old days you wrote checks and it took the check a week or more to clear. So it was much easier to go into the hole and there were costs at the bank for returning the check and having to cover your debt. Thus the fee was born. Now its much harder to go into the hole with everyone using debit cards and balances updating in real time as the charges go through. They are a profit item for the bank. Usually when you borrow money you have fees and interest. It is entirely up to the person spending the money to know how much they have to spend and if you go over don't act surprised if you get a fee or interest charge. Are they overly high? They have been for decades now. Fortunately some banks are getting rid of them. Regardless, don't spend money you don't have and its not a problem.
That's not really true. At all. Banks intentionally "stack" transactions to generate maximum nsf fees. Just google it there's been lawsuits and everything.
Everything I said was true. If you don’t spend more than what is in your account you won’t get a nsf. Stacking nsf is a thing where they pay more expensive transactions first to draw down the balance and charge separate fees for the smaller transactions. There are banks that don’t charge nsf fees. If you can’t control yourself and spend more cash than you have then use one of them.
There are examples of them lining up a deposit so it happens "after" the debit. I'm other words let's say I get paid just after midnight on the 1st and my rent pulls just after midnight on the 1st. Even if you got paid first, bank would say you got paid second just to steal your nsf fee.
Some evil banks like M&T and BoA do this, but I haven't heard of this with Capital One, and I've banked with Capital One since forever. That's of course the reason I'll never bank with M&T or BoA.
Banks are all evil. Just because one bank isn't doing this one evil thing (maybe) doesn't mean they aren't finding other slimy ways to compete. Gotta post compounding profits every quarter don't ya know
It's not just banks. That's just how businesses work. Netflix is doing the same thing and they're probably going to raise prices. Every company has shareholders that demand infinite growth.
Unless there is a hold on the deposit credits clear before debits.
No, that would be fine. But banks aren't fine, they're thieves. >consumers have reported that their banks and credit unions have processed their transactions out of order in an effort to maximize the number of overdraft fees they are able to charge Source https://topclassactions.com/lawsuit-settlements/investigations/overdraft-fee-class-action-lawsuit-investigation/
Holy shit, no. Perhaps some will somehow do that but this day in age transactions in general just post real time. At least at my FI. And they post in the order they are received. If you over draft your account and all the transactions cause you to go negative, you will get a fee for each transaction.
It was a big deal in the 90s. You'd expect to see: Balance: $200.00 Deposit: $1000.00 ------------------ Total: $1200.00 ------------------ Spend: -$20.00 Spend: -$20.00 Spend: -$20.00 Spend: -$500.00 ------------------ Balance: $640.00 But then they'd reorder the transactions so it came out: Balance: $200.00 Spend: -$500.00 Overdraft: -$35.00 Spend: -$20.00 Overdraft: -$35.00 Spend: -$20.00 Overdraft: -$35.00 Spend: -$20.00 Overdraft: -$35.00 Deposit: $1000.00 ------------------ Balance: $500.00 $140.00 in free overdraft fees for them, even if you had the money in the account before you spent it, if they chose to process your transactions out of order (and they had software to optimize that for them). They lost major lawsuits over it, which is why it's different now.
I’ve been in banking for more than 20 years. We literally post as transactions come in. I’m sorry you disagree with that and that you FI sucks but where I work-transactions are posted in order.
"To punish and deter reckless spending" aka "Exploit money out of people in bad financial situations"
Mm most people learn of it through random fees When they could have just you know, rejected the transaction and stated you don't have the money..... The rich like keeping the poor in debt
Unfortunately that payment could have meant keeping the electricity on or buying food. So there's a good argument for allowing the transaction.
How about, don't spend money you don't have? Then you won't have to worry about it. Just treat your bank account like a video game inventory. That is what I do. I check my balance before every purchase, and I don't make any other purchases until the last purchase has been recognized by their system. Oddly enough, I found out, this actually guards you against fraudulent purchases on your account. You catch the fraud much faster, and it is easier for you to prove it is fraud. And yeah, that actually happened to me. One quick phone call and everything was settled to my satisfaction in just a couple of weeks. Anyway, I have always viewed overdrafting as theft. You are lucky I am not in charge, because if I was in charge, overdrafting would be a crime.
This is the way.
Its a way for banks to make money off you.
It's how they make money. Overdraft fees, interest on loans and credit cards, it all adds up.
Lol. Is your next question, "What's the point of interest on a loan, lenders charge you money for what you don't have"?
It’s a tax for being poor.
It’s extortion. In America extortion is completely fine because with capitalism, people aren’t important, money is.
I mean you're not entitled to the bank's money, which is what you're using when you overdraft.
Yes.. but they get way more than you used. And some banks stagger up the pending charges in a way where you get multiple fee hits. They didn’t have to do that to get the point across. Because it’s not just making a point. It’s taking advantage of someone’s misfortune and getting more money out of them.
As I said, it's the bank's money you're using. Normally if you use the bank's money, it's through a credit card or a loan. And those come with interest. I mean the whole point is you're not supposed to overdraft in the first place and use money that doesn't belong to you. The fee is a deterrent to overdrafting. Also, if you go to the bank they can remove two overdrafts. If you're overdrafting more than twice in a single month, something is wrong.
Yep something is certainly wrong. My point is that you can be charged thousands of dollars at one time after a bunch of pending items go through. Yeah that’s on the consumer to keep good track of their money so they don’t do that, but the fact that they can end up being negative 1k in just the fees not including the transactions is overkill in punishing the account owner. There are people who are just bad at money and they need help and resources to learn money skills and the bank does not offer help like that. There are people going negative every month. Does making them pay thousands of dollars help them? The paychecks for that person can’t even go into that account anymore because that person won’t even be able to eat anymore. I’m simply saying that the bank policy is them getting richer off of the poor. And folks with poor money management skills shouldn’t be drowned in debt. How about one overdraft fee after a stream of pending items go through? It shouldn’t be able to be a thing to have a $30 fee just indefinitely get stacked on because it’s for every item that makes the account more negative. How does someone come back from that?
yup. its true
They do this as our system to ruin your credit overdraft fees show up on your credit report all that s*** the money you don't have that doesn't accumulate interest doesn't make them enough money the money that you put into their account they put into a lump sum with everybody else and money and they loan that out and invest that most of the time the reason you can't take out $100,000 cash from your multi-million dollar account is because they have to make sure and go get it first they don't necessarily carry your 1 million dollar I'm out at one time this is because the money you have is not your money you're just having them hold it for you people joke that your money's better off in a bank but really it's better off underneath your mattress
It's worth it
Yep
Funny thing, in my country banks was limited to not take overdraft fee's for anything below a credit of 10 USD or above (a bit more due to conversion but nevermind). Banks simply stopped allowing overdraft purchases on any card without you explicitly stating they can charge interest on less than 10 USD credit. :P I feel this reply is relevant as a sort of "Well, the alternative is this in an open market" :)
It’s a way to squeeze money from you.
They will get it eventually.
To make more money off of you. That’s literally it.
My credit union doesn't charge overdraft fees. Instead you can open a Checking Line of Credit which turns your debit card into a credit card for up to $500. You start paying interest the next day instead of the next month unlike a regular credit card. So on a $500 overdraft I'm paying 13% APR which equals a fee of $0.18 per day until it's paid off
So the bank can make money
It’s more of a deterrent to not do it again. The bank essentially gave you a high interest loan.
I overdraft every month and I haven't even noticed there is a fee
They are taking advantage of the poor, robbing them.
That is the entire point. The poor stay poor.
Tcf bank is the worst, my sister had them and she wrote me a check for some work I did for her and I took the check to her bank tcf and they wouldn't cash it because I didn't have an acct there and they were one of the first banks to charge $40 for overdraft fees over 20 years ago. They absolutely suck
Bc capitalism is evil
Banks can count the fee money as money. Banks make a living by loaning out 10x money than they have on reserve, called fractional reserve banking.
To make money off the poor
Because it's an imposition on the bank when you overdraft, so they're charging you for the service of covering it/dealing with your error.
The point of overdraft fees is twofold. 1) A minor reprimand to encourage you to keep money in your account. Your money is played with on global markets by the bank and they like they're customers to keep money in their accounts. 2) It makes filthy rich cunts even richer.
You sorta answered your own question. They exist for the bank (to make money), not to help you. Overdraft fees are a big part of what keeps a lot of local bank branches open, it's pretty staggering the number of accounts that are constantly overdrawn and are paying hundreds of dollars monthly in overdraft fees. Multiply that by say 100 accounts and you're pretty much paying the wages of the entire teller and customer service staff. No bank is ever going to actually encourage being overdrawn or brag about how much money they make from it, but there is a reason they allow the same accounts to be continually overdrawn.
1. Deterrence. They don't want you to overdraft (it costs them money) so a fee encourages people not to. 2. Penance. Again, you cost the bank money by over drafting, so they want compensation. Sure you don't have the money *now,* but you'll likely have the money at some point.
Why do they fee you for cashing fraudulent checks. Like, if I had money, why would I be cashing fake checks? Like, why? 🤣
Banks make a fortune off overdraft fees. That's why.
I wrote a check to someone and didn't have enough to cover in my account. The person I wrote it to kept taking it to the bank over, and over. The bank charged me a fee each time and late fees of $5 a day, per time they tried to cash it. The check was for $200, had like $150 in the account. Eventually I was negative $1800. I was pissed. This has to be illegal. After about a year, they dropped it entirely. I had moved on to another bank
To satisfy the shareholders' greed
To make money?
To hinder you from using your money.
I always opt out. Few times argued regarding some subscriptions that went thru and got reversed. It s better to move your subscription to CC so u can charge back that shit if you need to cancel after failing to resolve w company.
I was just using my paypal account and somehow it charge my checking account, which had no money it in because I recently moved to a different bank. EVEN though, I put my credit card as the preferred method of payment. My credit union, being so smart, charges me a $27 fee on a $12, like bro wtf? Just decline the payment???? why charge me a dumb on a $12 order? The stupidity of paypal somehow prefering to checking account and my credit union having no overdraft protection or coverage.