WE HATE OVERDRAFT FEES–I started a group on Facebook that said, “We Hate Overdraft Fees.” I immediately got an email from someone who pointed out with the very best of intentions, that I was announcing to the world my inability to pay my bills and how I was broke.
Let me rectify this–I have not overdrafted my account. I am not broke although close. haha
That is not the source of my inspiration behind starting this group or writing this blog. But if it was my inspiration and if I was broke, over-drafted out of my rent like some poor folks out there, my point here is still an important one for everyone to consider.
Overdraft fees that banks charge ARE ridiculous. You don’t have to be broke, dealing with overdrafts, or horrible at managing your money, to realize that banks engage in unfair and illegal tactics. Why banks charge overdraft fees are obvious. A 2007 study by the Center for Responsible Lending shows that consumers pay fees of $17.5 billion annually — on automatic overdraft loans of $15.8 billion per year. This means that the consumers end up paying $2.11 for every $1 they meant to spend, accidentally. All of the overdrafts are pure profit to the banks.
Since this means tremendous amount of money to the banks, they make sure they get their overcharges and fees. The numbers and how they get their overdraft fees tell a story of unfairness and deceptive business practices. For example, it is now common practice that all banks automatically enroll everyone into “courtesy draft” where they cover charges even if you don’t have the money. (No, they did NOT have this practice before.) They re-sequence your drafts from largest to smallest, not in chronological order, daily, artificially increasing the probability of your overdraft fees being higher, should you incur them. Some banks even hold bigger amounts certain number of days, on purpose, because statistically, this hidden held draft will increase the odds of the consumers confusing their transaction records. Further, they don’t disclose your overdrafts before they happen, as they certainly can in this age of instant communication through various technologies, but they notify you via snail mail, many days later.
Now try to ignore all I just wrote about these deceptive practices. Take the moral stance–what are the banks doing? They are picking on people down on their luck, in the dirt, to kick them into the ditch.
Somehow they are “bankrupt” and needing bailout money from the government, and complaining that government-regulated ceilings would impose restrictions on them hiring “star” CEO-s, complaining that having no bonuses at the end of the year would just make them create other hidden methods of rewards to their employees that “deserve” them.
All this really adds up to their wallets. Not the consumers’ or the citizens who pay their taxes. I hate overdraft fees. Don’t you?
