A Source of Easy Money

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[HomerJ]

oooh. you've touched off a nerve with this one. let me tell you, Bank of America's overdraft fee is $35 !!

thats right. this means, if I wrote a check or used my debit card for a purchase, and my checking account doesn't have enough funds to cover it, what they do, is they simply pull the funds from my savings account into the checking account. a simple electronic transfer! the $35 fee is beyond outrageous.

I recently, within the last month, took one of these overdraft notices i received in teh mail, and walked into my local branch, and sat down in the office with one of the bank reps and politely asked, "what can we do about this?"

of course, she went on about policy, blah blah blah, we cant change the policy, blah blah blah. I leaned in and asked, look, what comes first, the policy or the customer? i'm going to let you know right now that i've already opened another account with a local Credit Union (I have) and this for me is the last straw. I understand your policy, but are you sure you want to lose this customer? Are you sure now? okay. and thats it I walked out and took my money with me.

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[HomerJ]

yea it adds up. i had two within a couple weeks which was $70. but adding up over the years I've forked over how many hundreds of dollars in fees. This is probably way more than any interest I've earned. the interest earning is peanuts unless you have a huge some of principal. eventually you wonder why keep money in a bank at all if it is going to cost you money. this is why i switched to a more friendly local credit union

Plus, not only that, but if you dont hold a certain minimum amount in your account they charge you a $10/month account maintenance fee. thats another $120 a year.

it makes me angry

[draggar]

Many of the nation's banks have found that overdraft fees are easy money.

(snip)
LOL and we had to bail them out with US Tax payers money.

You're forgetting that they need that $59B for the executives' bonuses - it has nothing to do with the mis-management of funds or business operations.

oooh. you've touched off a nerve with this one. let me tell you, Bank of America's overdraft fee is $35 !!

thats right. this means, if I wrote a check or used my debit card for a purchase, and my checking account doesn't have enough funds to cover it, what they do, is they simply pull the funds from my savings account into the checking account. a simple electronic transfer! the $35 fee is beyond outrageous.

They'll also re-arrange your transactions if it's over a weekend, for example:

Say you think you have $250 in your bank account and you charge the following on your debit card:

Friday night 8PM you go to the movies - $25
Saturday you have lunch with some friends - $20
Sunday morning you buy some domains - $20
Sunday evening you go grocery shopping - $150

That's a total of $215 - you should have $35 left, right?

Oops! They didn't tell you that a $150 check didn't clear yet!

So only one should be an overdraft, right?

Nope!!

They'll do it this way:
Groceries: $150 first ($35 fee)
Movie: $25 ($35 fee)
Lunch: $20 ($35 fee)
Domains: $20 ($35 fee)

So your $215 is now $345 that you'll need to fight for.

(Yes my wife had this issue when she had over $300 scammed from her).

Is it wrong? Not in their eyes since none of it will be "processed" until Monday morning.

[Acro]

It makes sense to me. Be sensible with your money. It doesn't take a rocket scientist.

[draggar]

It makes sense to me. Be sensible with your money. It doesn't take a rocket scientist.

99% of the time I would agree but things do happen - expected AFTs don't come in, the government is late with an unemployment check, someone charges you more than they should have, scams, BANK ERRORS (and yes, they do happen), etc..

[biggedon]

have to agree with Theo here

money management is key to avoiding extra charges and fee's


but usually a phone call will remove any late fee's charged on a long standing account with good payment history.

[Gerry]

h
but usually a phone call will remove any late fee's charged on a long standing account with good payment history.

I am surprised that banks are not charging fees for talking to a live person on the phone.

There are quite a few companies doing this (primarily computer and software makers).

Soon, a bank may charge teller fees and pay to park in their lot while you do business.

And those lollipops they hand out to your kids at the drive thru window? They'll hit you up with a $1.50 each charge added to your account.

[jasdon11]

A friend is a director in a large gift/catalogue company. They turnover nearly £1billion ($1.66billion) and their stuff is aimed at the low end of the market. He tells me that they want people to take on debt with them as that's where they make their money; by servicing the debt. They don't make anything on the product sales.

They build in a sizeable percentage for total loss, and work for a certain number of customers to extend their payments and hence, pay more 'interest'.

If everyone saved up and bought stuff outright (or at least put down big deposits) their lives would be much better.

[Tia Wood]

For this exact reason is why I don't use my checks and draw out of the ATM, except when I make online transactions. It gets you in trouble when you depend on those debit, credit cards and checks. Which, I believe, is how they want you to be.

[HomerJ]

have to agree with Theo here

money management is key to avoiding extra charges and fee's


but usually a phone call will remove any late fee's charged on a long standing account with good payment history.

i disagree. yes, money management will help, but that doesnt make the charging of the fees unscrupulous.

i can envision a future where the governement institutes a tripping over your own shoelace tax. of course, if you dont practice good shoelace tying management it will be no one to blame but you.

if there was a reason to justify the bank overdraft fee, then fine. but i dont see it. If the fee was something on the order of $1 - $5, then maybe that can be justified for the nanosecond of electricity it takes to shift those funds around. but for $35 I think its a bit absurd.

i'm happier with the credit union. their overdraft charge IS actually $5. not only that, they are a 4-star rated bank. Since 85+ banks have failed this year already, up from 27 last year, I've done some research and come to find out that BOA is rated a rather risky bank right now. and what with the FDIC now broke ...


by the way, heres a little nugget to chew on. have you ever looked at where your paypal funds are held?

[stock_post]

I remember paying late fee..
It is good money for them.

[Banned: theinvestor]

They can charge $35 or $250. What's the issue? You are using money you don't have in your account. Think of it as a loan. The $35 fee is generous in my opinion.

BTW - you can ask for your bank account to NOT have overdraft protection. Therefore even if you try to purchase something and you don't have the available amount in your bank account it will be rejected...

so what really is the issue here?

These are the same people that complain about high interest rates on credit cards...no one asks you to buy for something and NOT pay for it in full...you do that yourself...

IMO these charges are not outrageous they are FAIR!

i disagree. yes, money management will help, but that doesnt make the charging of the fees unscrupulous.

i can envision a future where the governement institutes a tripping over your own shoelace tax. of course, if you dont practice good shoelace tying management it will be no one to blame but you.

if there was a reason to justify the bank overdraft fee, then fine. but i dont see it. If the fee was something on the order of $1 - $5, then maybe that can be justified for the nanosecond of electricity it takes to shift those funds around. but for $35 I think its a bit absurd.

i'm happier with the credit union. their overdraft charge IS actually $5. not only that, they are a 4-star rated bank. Since 85+ banks have failed this year already, up from 27 last year, I've done some research and come to find out that BOA is rated a rather risky bank right now. and what with the FDIC now broke ...


by the way, heres a little nugget to chew on. have you ever looked at where your paypal funds are held?

[draggar]

i can envision a future where the governement institutes a tripping over your own shoelace tax. of course, if you dont practice good shoelace tying management it will be no one to blame but you.

By that time there will be a lawyer ready to help you use the shoelace company for not making laces that stay tied, the show company for not supplying short enough laces *and* designing the show so they the laces are too close to the ground, and the company who manages the ground where you tripped because it didn't have an anti-shoelace field around it.

This is all if you don't get injured, that'll tack on a lot more people you can sue.

[HomerJ]

its exorbitant.

if you want to get technical about it, the bank doesn't actually have that money either. this is why everyones big fear is a run on the bank, because everyone now knows that if everyone walked in simultaneously to withdraw their funds the bank wouldnt even have 95% of it. so what are they loaning me? what risk are they carrying?

besides that, the point is they took the money straight from my savings account and pushed it into my checking account. they're giving me something that was already mine. just pushing some ones and zeros around.

BTW - you can ask for your bank account to NOT have overdraft protection. therefore even if you try to purchase something and you don't have the available amount in your bank account it will be rejected...

the nice lady at the bank didnt happen to mention that option

These are the same people that complain about high interest rates on credit cards...no one asks you to buy for something and NOT pay for it in full...you do that yourself...

N/A

[500,000]

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[Banned: theinvestor]

My bank comes with a standard $500 overdraft protection. If you have been a customer for a while that can even be extended to $1000 or even $5000.

I cancelled my overdraft protection though on my account.

This isn't a discussion of how they are loaning you the money...the fact is when you use overdraft protection you are using a service they are providing you. The cost of that service is up to them to charge. When i buy a domain from you..surely i don't tell you the amount you charge is exorbitant...if i'm not interested i won't pay. Period.

[stock_post]

I like the overdraft protection which saved me few times.
You only pay the interest not the check bounce fee.

Bad part is when you deposited the checks and they don't credit to your account and saying they are still collecting the money and charge me for lack of money.

[HomerJ]

which is why i've changed banks

going back to the article ..

Advocacy groups say banks are making a fortune because consumers are unaware of the exorbitant costs of overdraft services. And banks, they argue, have an incentive to keep it that way.

That is what Mr. Means found when he approached his Wells Fargo branch in Fort Collins, Colo., to redress the $238 in fees he was billed. An employee explained that her ability to waive fees had been revoked by the bank because she had refunded fees for too many customers, Mr. Means said she told him.

Rory Foster, a former branch manager in Illinois, said that Wells Fargo based its compensation for managers in part on overall branch profitability. Fee income, including that from overdrafts, is part of the calculation.

A spokeswoman for Wells Fargo, Richele J. Messick, said the bank did not tie branch manager pay directly to fee collection.

Yet fees, and how they are generated, remain a mystery to many consumers. Because regulators do not treat overdraft charges as loans, banks do not have to disclose their annualized cost to consumers.

And often, the price is enormous. According to the F.D.I.C. study, a $27 overdraft fee that a customer repays in two weeks on a $20 debit purchase would incur an annual percentage rate of 3,520 percent. By contrast, penalty interest rates on credit cards generally run about 30 percent.

"People would be shocked at how brutally high those fees are relative to the costs of a credit card," said Edmund Mierzwinski, the consumer program director for the United States Public Interest Research Group.

And when a consumer does overdraw an account, banks have found a way to multiply the fees they collect by rearranging the sequence of transactions, critics say.

Ralph Tornes, who lives in Florida, is pursuing a lawsuit against Bank of America for charging him nearly $500 in overdraft fees in 2008 after it rearranged his purchases from largest to smallest. In May 2008, for instance, Mr. Tornes had $195 in his account when he made two debit purchases for $8 and $13; the bank also processed a bill payment of $256.

He claims that Bank of America took his purchases out of chronological order and ran the biggest one through first. So instead of paying $35 for one overdraft fee, he was stuck with three, for a total of $105.