In my mind, it doesn’t make any sense to charge a customer money they don’t have as a penalty for not having money. To me, it’s like being at fault in a car accident and the cop that tickets you starts bashing your car.
In this new age of the internet and instantaneous information, why do the banks still have to wait a few days for a check card transaction to go through? If I don’t have the money, don’t let the transaction go through.
Does anyone balance their checkbook if they don’t write checks? Does anyone still write checks since most bills can be paid online? I feel like the banking system still relies on an archaic paper system to solely benefit themselves. Perfect example:
I write my rent check on the 1st of the month. My landlord doesn’t cash it until at least the 10th or 11th, yet on my account, it dates the transaction to when I wrote the check, not when it was cashed or deposited. If I didn’t have the money then, I’ll get overdraft fees.
I understand banks are in the business to make money, but should they be allowed to do that for a simple checking account? Loans have interests so they’re making money anyways. What else do you do with your paycheck and still have access to it besides put it in your checking account? You can’t invest it because you can’t pay bills with an investment.
I just don’t think banks would lose that much money if they just got rid of overdraft fees. They already have everyone’s money. Banks are almost a utility in my mind because you need them to maintain your finances. How else can you build credit or buy a house without a bank?
Thanks for the early replies guys. First, i think I might be wrong about the example I gave with my landlord. It shows up in my online statement as the day I wrote the check.
I guess what I’m really asking is if there’s a way to penalize an overdraft without overdraft fees? Since everyone has check cards and uses them frequently, when I get hit with overdraft fees, it could be 5 and 7 at a time and at 35 bucks per transaction, it’s even harder to get out of that negative hole. It’s funny how I can have 20 bucks in my account and I can still make small purchases (coffee, lunch, cigarettes, grociers) all day using my check card spending well over the 20 bucks I have.
What about charging a larger overdraft fee once (say 50 bucks) and putting a temporary hold on the account? Or just putting hold if your account goes below 20 bucks?
Am I wrong to feel like the bank shouldn’t let me make a 20 dollar purchase with a check card if I only have 15 bucks in my account?
It’s not predatory. At worst overdraft is stealing the bank’s money, so be glad they don’t call the cops. At best, it’s taking an unplanned loan from the bank.
Either way, the fees were disclosed to you at the time you opened your checking account so you entered into the agreement with them willingly. If you don’t like the terms they offer on their checking account, go somewhere else.
Your bank should debit your account on the day it gets the request from your landlord’s bank to cash the check, unless you got a really funky bank. Your landlord is probably cashing it sooner than you think.
The best advice you could follow is don’t expect the bank the to do you any favors. Take responsibility for your account balance. Don’t write checks that you don’t have the money to cover.
I agree with you about the check card and check deal. Those make little sense and I honestly expected that, if my checking account was low, my debit card would come up declined.
However, the principle of overdraft fees is necessary to keep people from, well, overdrafting their accounts. If people could go over on their accounts without a penalty, then they would start treating their checking accounts like credit cards, and that would be bad for the banks because they’d have less money to loan out. However, if there’s a penalty for going over, they’re more likely to be extra careful to have a positive balance. So it’s not the revenue that the bank’s after, it’s the incentive. Unless I’m misunderstanding something major about the banking system…
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what kind of bank do you have? i used to have an account with Washington Mutual and they were eating up my money, too. But, i have to admit, when i went back to the banking center and spoke to the greeter, she listened to what i had to say and sent me on my way with a refund of 6 overdraft fees out of 10. since then, i have switched to Bank of America…they are less than willing to hear what you have to say. i have went to heaven and hell and back again with them, fighting their overdraft fees. finally, i got smart and started using technology to MY advantage. i used the calendar on my cell phone and noted specific monthly dates when my bills were due. then i went online and set up my online banking account to email me when my account was low, when an online payment posted, etc. Plus, most Bank of America ATMs have the "do it yourself" deposit slots where you can deposit your cash and checks without going inside the bank…and before/after hours!! they have immediate credit towards your account on cash deposits before 8 pm, and it will post to your account on that day…none of that "pending" crap. i live in miami, fl, so i dont know if they have a Bank of America in your city.
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It is not legal to debit your account until the check is paid, so if they are doing this you should complain and report them.
In general it is reasonable to charge a fee because there is extra work involved, but many bank charge much more than it cost them, and is just a way of making money. If there is a credit union you are eligible to join it is a way out of the traps bank set for you. Most of them offer automatic overdraft protection on a line of credit so up to a pre approved limit and they automatically loan you the money to cover overdrafts with no fee and no returned checks. Mine charges 12% interest on the borrowed money so I use it to pay credit card bills in full when I am short of cash, which also saves money.
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absolutely. IF the banks would allow the customer to "turn off" the funding of overdraft checks, these would not be predatory. Truly, the bank simply SHOULD NOT HONOR a check with insufficient funds.
But today it’s a big game, and if you listen to the conference calls given by the big banks on earnings announcement day, you’ll hear their glee when they discuss ways to increase "fee income".
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Overdraft fees are a burdensome nuisance. There are ways to avoid them. Meticulous accounting for everything effecting the balance of the account is one. Another is paying a monthly fee for overdraft protection.
Thirdly people could petition the department of banking or federal government to eliminate overdraft fees or limiting the usury like penalties.
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It’s not predatory. At worst overdraft is stealing the bank’s money, so be glad they don’t call the cops. At best, it’s taking an unplanned loan from the bank.
Either way, the fees were disclosed to you at the time you opened your checking account so you entered into the agreement with them willingly. If you don’t like the terms they offer on their checking account, go somewhere else.
Your bank should debit your account on the day it gets the request from your landlord’s bank to cash the check, unless you got a really funky bank. Your landlord is probably cashing it sooner than you think.
The best advice you could follow is don’t expect the bank the to do you any favors. Take responsibility for your account balance. Don’t write checks that you don’t have the money to cover.
References :