What's even more amusing about the bank's excuses are that if they were really there to teach people a lesson, maybe we would see a decline in overdraft fee collections. But this would lead to smaller bonuses for the banking industry's chain of command which would never be a good thing.

When I was right out of High School in 1986 the ATM would simply say "insufficient funds" and not give you money. I can't say I was ever embarrased by this. Imagine walking into a teller and trying to get more money out than you had in your account. I'm pretty sure they would not let you, and I'm pretty sure they would not scold you and ridicule your. I think people can handle not being able to get out money.

Funny thing happened this weekend. I was at the Wegmans buying dinner stuff. What I'd picked out was worth more than I had in the bank, so my card declined. Both on debit and credit. It was so odd... I'm used to them just accepting the transaction then hitting me up for $30 later. I think the only things that will overdraw my account are automatic purchaces, recurring things like gym memberships, or when a gas station puts a ghost hold on my money and it doesn't show up for a couple of days.

Funny, I remember a day when a bank simply declined to authorize a transaction if you didn't have the money or credit limit. Embarassing, maybe, but sure did teach a lesson about fiscal management.

Of course the banks are fighting this, overdraft fees are one of the best ways they can profit from the 18-30 year old market who are still new to how EFT (electronic funds transfer) processing works.

Just because your online banking says you have $100 available it may be a lie. They're probably not counting the $30 you spent at the pump 4 days ago that hasn't cleared because the cheap bastards at Cheveron use the slowest most cheapskate debit processing company known to man.

I used to buy everything w/ my debit card. It was so easy and convenient I thought. Now that I know the dark side of credit and debit processing I pay for most of my purchases in cash.

Why are the banks required to baby-sit their customers? Everyone should know that if you spend more that you have, you get penalized. Why should the banks be forced to invest a ton of money into a system that will tell customers they are too broke to buy something? Again, where has personal responsibility gone? Of course, on the Consumerist, it's always the banks fault. They are trying to scam the customer. Down with Banks!

Even as someone who has been hit numerous times with overdraft fees, I lean slightly towards the banks in this one. It IS the consumer's responsibility to manage their finances, not the banks. Perhaps there is a middle ground here, where, instead of repealing the NSF fees altogether, they establish a percentage-based fee structure. That way, someone who NSFs on a pack of gum doesn't have to pay the same fee as someone who NSFs on a plasma television.

On a related note, I would much rather see the debit/credit practices of banks addressed. That whole posting-highest-debit-first-regardless-of-place-in-the-transaction-timeline thing is ridiculous.

I cancelled the "overdraft protection" on my account after only finding out that I had it when my bank honored ATM withdrawals -- by me, from my bank's own ATM -- when I didn't have any cash in the account. $29 fee for a $40 withdrawal. Sure, it was my fault for not having kept track of the balance, but that doesn't negate the fact that I NEVER SIGNED UP FOR A LOAN FROM MY BANK. I just wanted forty bucks; if I didn't have it, then I didn't want it, and they should have told me. It's also absolutely true that this is a "service" that I never signed up for. I really don't understand why that wouldn't be governed by the TILA rules, and I support this legislation -- and I'm 39. (BTW, the bank, WAMU, reversed the fees when I called and complained)

I contacted both Wells Fargo and Comerica (my two banks) and the BOTH refuse to offer this service.

Instead they say:

* Manage your money better (insulting, to say the least)
* Enroll in our overdraft protection (by opening a line of credit or savings, which is STILL subject to fees if you dip into these on a transaction!)

I only overdrafted my account once, and this was because I used the wrong ATM card at an ATM by mistake.

The attitudes of these banks really infuriate me. I am probably going to close one of these accounts and move to a better bank.

Can someone suggest a bank that offers the following? :

* Rebate ATM fees
* Deny transactions that overdraft your account
* Bill Pay

Thanks guys & gals.

@bradg33: This isn't about baby sitting.

It used to be that you couldn't spend more money than you have. Now, banks discovered they could make a fortune by creating this system where you can overdraft your account into oblivion, with $30 fees each (once is bad enough).

It is actually the banks who spent time and money to do this. We just want the old way of getting our transactions denied when we don't have the money!

whats really sad is we have to submit a bill to do something that my original bank (Summit) did automatically before they where taken over by Fleet, then BoA.

BRADG33 wrote: "Why should the banks be forced to invest a ton of money into a system that will tell customers they are too broke to buy something?"

Because it's not always as simple as being "too broke," for one thing. I've had my bank place mysterious, unanticipated holds on my deposited checks, and I end up getting slammed with a fee for trying to buy something without knowing whether or not the check has cleared yet. The way I see it, if a bank is going to place a hold on your money and then charge you an arm and a leg for trying to use it, they ought to invest that money in a system that will preven the problem in the future.

Sure, it is each individual's responsibility to pay attention to his own available funds. However, why should the bank's standard handling practice be one of "leniency" in allowing the overdraft-generating transaction? How does that teach fiscal responsibility? It looks more like the bank teaching that, even when the money is not there, they will let you spend it. Much more responsible to simply decline the charge. How will it be a tremendous expense on the banks' part to implement this change? That exact system was in place for years before they recognized the revenue possibilities in the "overdraft loan" industry. All they have to do is tell the ATMs and clearing houses to go back to declining rather than allowing overdraft transactions. Overdraft fees are akin to usury, similar to the payday loan industry.

@Darren666:
i really hate to be "that guy," but my credit union does all of that -- and their tellers are pretty good to look at, to boot.

I'm always for personal responsibility but excuse #1 "This is our way of saving a customer from the embarrassment of a declined transaction." is utter BS, what is this the 1950's, and I don't want my dinners club card declined?

I think you should have the choice to turn it on and off. I also agree with this bill. Today more and more people use debit cards and the banks hold all their money. Less people use cash or checks. I think it is perfectly reasonable to give a warning if it will cause an overdraft fee.

A happy medium: don't let the transaction through if there's not enough $$. OR charge less for overdrafts. How's $5 per transaction? That's liveable. $30 per transaction is worse than a check cashing place.

and gotta love that snake pic.

I'd rather see ATM fees go away

@Darren666: How is "manage your money better" insulting?

Banks are in the business of money. They lend it, they manage it, they make it. This shouldn't come as some huge surprise that one day someone at a bank thought of the concept of charging for NSFs. They only started charging because there's a market (people who spend more than they have) for it.

If you are old enough to have money to spend and a bank account to put it in, there shouldn't be a purchase that you make where you're not 100% positive you've got the funds to cover it.

@bradg33: Guy walks into a bank, asks to make a withdrawal, but he doesn't know how much he has after a few of the days expenses. Teller says, go ahead, make your withdrawl. When the gentleman asks for his balance, teller screams, "What? you don't KNOW! It's not my job to keep track of your balance for you!" and stomps off in a huff.

And what tons of money on the system? Each bank already has a line or two of code that reads like this:
if FUNDS < CHARGE:
allow CHARGE
and
BALANCE = BALANCE - OVERDRAFTFEE.

How hard would it be to change it to:
if FUNDS < CHARGE:
disallow CHARGE

Not too hard is is? I'm not a programmer, but the above concept code is my intellectual property. I can be reached for royalty and licensing discussions at the email address above.

Thank you.

Why does everyone feel like it is the banks responsibility to manage their money? You should KNOW how much you have in your account before you try to spend from it. I cannot even fathom being so irresponsible as to go into a store and attempt to buy something on the chance that I have enough money in my account. There are numerous ways to check your balance on the go, from cell phone web access to calling an automated line. There is absolutely no excuse for poor financial management. If you don't like paying overdraft fee's, DON'T OVERDRAFT YOUR ACCOUNT. It seems awfully simple to me. I'm not a wealth individual, but I also don't spend each and every cent that I make. I am able to manage the money I have coming in and make sure that no more than what comes in goes out. If you NEED to buy something and don't have the money in the bank, use a CREDIT CARD. If you don't like how much your bank charges for over drafts, find a different bank. Don't like ANY banks fees? USE CASH. Last time I checked, you can't overdraft if you pay in cash.

@Xerloq: "But he doesn't know how much money he has after a few days of expenses"

This is the problem. Spending money and not keeping track of it. How hard is it? I have $100, and I spend $50. How much do I have left?

Personally I think this would be a nightmare. Considering how long it takes for banks to process transactions, sometimes you're not going to know you're in overdraft until it all of a sudden happens days after the transaction took place.

Secondly, how could they warn you? Is there any possible efficient and non-embarrassing way other than just declining outright? Then banks would be out all that money they're making right now and other fees would raise to cover the defecit. I think this is just a stupid idea. Whoever drafted the bill didn't think it through.

Now I've had my share of overdraft fees. Maybe more than my fair share. They're extremely expensive and take advantage of the younger, new to money and a paycheck, however small, population. But it does teach you to pay closer attention. If you learn from it. Personally, I'm still learning.

Funny, my bank (Commerce Bank in Missouri and Kansas) has been doing this since I've had an account with them (four years). In fact, one day I had the pump at the gas station stop when I reached the end of my available funds.

Bah. Might as well just decline the transaction and get on with it. Getting a notification of an overdraft fee wouldn't be any less embarrassing than a simple declined transaction.

Let people get overdraft protection if they really need it. Or better yet, let them keep track of their frigging checking accounts.

@href="#c2526529">pinkbunnyslippers: Its insulting because I manage my money perfectly well so thus it was not addressing the problem I had.

@bradg33: Way to totally miss the point.

@Arlahna: Banks know how much money you have at any given time. Check card and ATM transactions deduct from your balance instantly at every bank I have seen.

As for how - thats the Bank's problem. They could just simply decline the transaction. The financial systems already have the system in place for dealing with non-sufficient funds and closed accounts, this would fall under the same category.

My bank declines the card if the money isn't in there. I've had a couple of instances where I lost track of what was in the account, and found my card declined the next time I tried to use it. I really appreciate that they do this, and my husband and I have told them as much. We'd rather be spared the overdraft fee and find an alternative than find ourselves a few hundred in the hole because multiple charges were authorized.

There are a lot of things that we like about this bank; it makes us mildly paranoid that they'll be bought out by some soulless corporation.

@bsankr: Then why not say which credit union you use? It's not like all of them do this.

@Darren666: You don't seem to have a point. You want to the bank to manage your money for you, plain and simple. You want to be able to attempt to spend up until you run out of money. So rather than being responsible and making sure you keep track of your expenditures, you want it to work more like Russian roulette. You want to swipe your card and hope it works. If you don't have enough money, you want someone else to tell you so. The overdraft possibility is there for a reason. There might be a time when you are in desperate need of something, say gas or medication, and you have $40 in your account and the gas/medication is $50. The bank set it up so you can get what you need, but you have to pay a fee for the privilege. It's not their job to monitor that for you in those situations.

Ha, if it's as embarassing as they claim to be declined, isn't that more than enough to accomplish 2), and 3)?

None of the 3 reasons justify the overdrafting instead of declining. All 3 work in both cases.

However, an overdraft takes more money from them, while the decline does not. Makes this a real simple decision for the bank. I'm all in favor of this bill.

@bradg33: Uh, my point was very clearly defined. Would you care to read what I said?

You seem to think that we are asking the bank to manage our money for us, which is not the case. Asking the bank to not allow us to overdraft our accounts is no more 'managing my money for me' than it is for the bank to let me overdraft my account.

The simple feature I am asking for actually requires less resources of the bank to implement than it does to implement overdrafting. Banks will, as a matter of fact, start declining your transactions after a certain amount of overdrafts!

As for emergency money: I always keep cash in my accounts for this purpose.

The reasons why I want to protect myself from an overdraft is pretty simple. It protects me if I use the wrong card at the store or at the ATM.

It also gives me an element of protection if my cards are stolen or my checks are forged - they can't take out more than I have and rack up overdrafts. While the Bank may promise protection against theft or forgery, why should I depend on their non-legally binding promises? I'd rather err on the side of caution.

I agree with all the posters who say that it's our responsibility to manage our finances, and it shouldn't be the bank's job to "babysit" us.

However, banks make it difficult to manage your transactions, because they process your deposits, charges, checks, and withdrawals in mysterious, unpredictable ways. The time it takes for a transaction to hit your account is impossible to anticipate, and the order that a set of transactions will process in is equally unpredictable.

Many of us aren't yet established enough to have a big enough "cushion" in our checking accounts to allow for unpredictable transaction processing. I manage my money obsessively- I track it with Mint, Moneydance, and an Excel spreadsheet. Even so, the difference between being in the black, and getting $200+ in overdrafts can often depend on how quickly (or slowly) something processes.

For a practical solution, why can't we choose to opt out of overdraft fees? Why can't I choose to simply have my card declined for an overdraft purchase, or be denied at the ATM? The banks say that they do it this way because "it's what the customer wants." It's 2007, we have the technology to enable each customer to get what they want.

@Steel_Pelican: The ways banks process your transactions are specified in their disclosures. Read them, and act accordingly.

@bradg33: Wrong. Why would a bank take 13 days to process the same paycheck, deposited at the same ATM, that it normally process in 3?

@Steel_Pelican: You can opt out of overdraft protection; or, at least I did with WAMU. They tried to talk me out of it, touting its great benefits. But, as others have said, it is my job to manage my money, not theirs, and I don't want to pay them for something that I can, and should, be doing for myself. If this means I end up paying someone else for bouncing a payment to them, so be it.

And, BradG33 -- If I need the $50 in medicine, and I only have $40 in my checking account, then I will use some other source of funds (namely, a credit card). My checking account is not a line of credit. It's my bank that tried to turn it into one for me, with poor disclosures.

@Steel_Pelican: Have you actually READ the disclosure?

@AnneCA: Different banks define "overdraft protection" differently. Sometimes "overdraft protection" means the bank covers the overdraft by transferring money out of your savings account to cover the difference. Other banks just mean "we'll loan you the cash at 300% interest."

My bank doesn't let me opt out of that second kind of overdraft protection. Their answer was mailing me a little check register, which I found pretty insulting, because that's exactly the problem- the bank processes transactions in the order that they want, on the dates that they want- so a check register is pretty useless.

I dont need them to warn me. I just want to opt out of the possibility of overdrafting my accounts. I simply want the transaction denied if I dont have the funds for it. It would be super easy for them to implement, they just dont want to because of all the revenue that they earn off overdraft fees.

@bradg33: It's not about what's disclosed. If a bank says: "We'll process your transactions whenever we damn well feel like it. You should probably call our 800 number every couple hours to see what your available balance is, because your check register is worthless and so is our online statement. Good luck managing your cash." That doesn't make it fair.

When a bank charges me $300 because they lost my paycheck, there's no amount of disclosure that can make that a fair business practice.

@bradg33: Wow, you seem to be taking this discussion very personally. As for asking the bank to manage my money, that is actually one of the primary purposes of a bank. They exist to do what I tell them to do with my money so I don't have to keep a big suitcase stuffed with cash under my bed. More importantly, I expect them to be honest with me about what's in my account, and not to spend money I don't have if I mistakenly think it's there.

There's plenty of horror stories (as Consumerist readers well know) about people who have received incorrect information from the bank about account balances, been screwed by absurdly long deposit clearing times, and the like, while banks are raking in the fees. The downside of legislation like this is what exactly? As many people have pointed out, banks used to do this all the time by simply denying the transaction.

For the record, I have never overdrafted any bank account or bounced a check ever, nor do I ever plan to. But it's just downright dastardly for the bank to profit from people's errors in tracking their finances.

@Beerad: "But it's just downright dastardly for the bank to profit from people's errors in tracking their finances."

How is that the case? If someone makes an error in tracking their money, there should be no consequences? If you bounce a check, there are statutory fee's involved. How is that any different? Your argument is flawed. The bank is not there to "manage" your money. They are there to hold it. If you want it managed, hire an accountant.

@bradg33: "How is that any different?"

The bank doesn't have to loan me the overdraft coverage for ATM withdrawals and overdraft purchases. I don't want them to loan me the money. We all understand that we should be charged when the bank loans us the difference, but we're asking for the option TO NOT RECEIVE THE LOAN, and simply be declined for the withdrawal or the purchase.

YAY!

@bradg33: You're right, the bank isn't there to manage your money. However, the bank is gaming the system to make the most amount of money possible. Why do you think the banks offer overdraft "protection"? It isn't out of the good of their hearts, nor is it to help teach their customers how to handle their money better; it's because it makes them a boatload of money.

I would probably agree with you if it weren't for the fact that banks are making it harder and harder to manager your money without their help (which, of course, costs $$).

@bradg33: If you don't like The Consumerist slant, go read another blog.

for those of you saying DECLINE MY CARD DAMMIT! all you have to do is tell the bank you want to "opt-out" of overdraft protection (or whatever they want to call it). they can already do this. i'd recommend a letter so that it's in your file in case someone f-'s up.

this is not as easy as people think. for two reasons: 1) everyone has 2 balances at their bank - their "bank" balance & their "book" balance. a bank doesn't know that you wrote a $900 check before you spent $200 at the grocery when you only had $1000 in your account. as far as they knew, you had $1000. now, the way some of you are talking, you would rather have the $900 check bounce than have it paid. keep in mind this isn't free either ($25-$35 ret'd item fee PLUS whatever recovery fee the payee charges you). 2) card networks allow certain merchant types to "force post" transactions to accounts. these transactions are approved without the merchant even checking whether you have the funds available or not. in a case such as this, the bank has no choice but to post the transaction. examples include hotels, car rental agencies, airlines, magazine companies, any merchant that sets up recurring billing, & a load of other merchant types. in addition, almost every merchant has the ability to "adjust" their transaction amount within the 3-day window.

personally, i think o/d fees are getting a little too pricey & banks are taking advantage of them, but i don't see this as a valid fix. i would rather see banking regulators require that voluntary overdraft become an OPT-IN instead of OPT-OUT policy.