Would You Like To "Opt-In" To Your Bank's Overdraft Fees? Tell The Federal Reserve!

The Federal Reserve has proposed some new regulations that would, among other things, require banks to let you opt-out of the “overdraft protection” services that often result in consumers being charged large fees for buying one too many (or 6 too many) packs of gum with their debit cards. The Center for Responsible Lending thinks the programs should be “opt-in”. Either way, without the overdraft program, your debit or atm transaction would be denied for non-sufficient funds and you would not be charged a overdraft fee.

From the Proposed Rules:

Among other things, the proposal would require institutions to provide consumers the ability to opt out of their institutions’ payment of overdrafts. The Board is proposing to amend Regulation DD to ensure that consumers receive effective disclosures about their right to opt out of overdraft services, by setting forth certain content, format and timing requirements for the notice.

The Center For Responsible Lending argues (emphasis ours):

Given the low likelihood that people will unsubscribe, the default policy should place consumers in the arrangement that provides them with the greatest benefit, which is clearly not one that costs Americans more in fees than the amount of the loans themselves. In fact, with debit overdrafts, the cost averages twice the amount of the transaction, while the cost of being denied is zero. If consumers were warned they would be charged a $34 fee for buying a $2 donut, they might instead choose to hand the clerk a $5 bill – or skip the donut. The proposed rule would only be justified if consumers preferred to be enrolled in these overdraft programs and received real benefits from them. But evidence overwhelmingly shows that consumers don’t want overdraft loans and don’t benefit from them; thus, they should not be strapped with the burden of escaping this expensive trap.

The Federal Reserve has asked that consumers who are affected by overdraft programs submit their opinion of the proposed rules. If you’re interested in this issue, you can give the proposed rules a read (PDF) and then submit your comments to the Federal Reserve via email. To do so, place “Docket No. R-1315″ in the subject of your email, and send it to: regs.comments@federalreserve.gov

If you’d like more information from the Center For Responsible Lending, you can get it here: “Support Opt-In Requirement for Overdraft Fees” (PDF)

Proposed Rules, Truth in Savings (PDF)
(Photo: Morton Fox )

Comments

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  1. Rippleeffect says:

    I’ll do the legwork this weekend to send an email. This makes total sense, but I’m sure the banks will fight this with everything they’ve got.

  2. TVGenius says:

    Halle-freakin-lujah.

  3. morganlh85 says:

    My awesome credit union has always declined my debit card if my balance won’t cover the charge. I am very grateful for this since I’m awful at balancing my checkbook. It certainly is NOT a convenience to get an overdraft charge.

  4. I had to opt out of my overlimit protection for my Chase cards. Apparently a “limit” isn’t really a limit unless you tell them you want it to be. They gave me, we didn’t want you to be embarrassed by declining your card. I said “I’ve used credit and debit cards enough to have them declined due to poor communication lines and other computer errors, so being declined isn’t embarrassing.

  5. ltlbbynthn says:

    I am genuinely surprised and refreshed that this is a proposed resolution. Who knew government cared about consumers?

  6. @morganlh85: My credit union’s the same way, although they recently sent us a letter requiring us to “opt out” if we wanted the card to behave the same way. I didn’t understand why then, though; it’s nice of them to give us that option up front.

  7. mgy says:

    My overdraft problems never occur when I attempt to spend money with my posted balance already below $0 – it’s when the bank manipulates the posting of transactions, regardless of the day the money was spent, so that the largest transactions clear my bank account first, then all of the little ones (which I had money for when I purchased) rack up the fees. I think THAT shit needs to stop first.

    In before “you should know how much money is in there, blah blah blah”

  8. Bladefist says:

    I’m against this.

    1) More regulation? Seriously?
    2) You can’t budget your money and not buy things you cant afford? Seriously?
    3) This is a big money maker for banks, and with idiots out there over drawing every 10 seconds, it makes all the services like free-checking, and bill payment possible and free to the rest of us.

    You take that revenue away from banks, and you’ll see all their other services go way up in price.

    Also, sometimes emergencies happen, and you need cash. I would feel bad for someone who was denied on a transaction that was critical to have let through because they didn’t plan for it. Sometimes over drawing is a life saver.

  9. donopolis says:

    And low the banks bestowed upon their weary masses a shiny new NSF fee of $35.00.

    Don

  10. Carl3000 says:

    I have a plan to make sure you never run out of gum. If you pull out a pack and it’s empty, I give you a new pack for $35 as a courtesy. You may not opt out. I don’t want you to be embarrassed and not have gum. (Also maybe I profit from this)

  11. battra92 says:

    I’m this close to shredding my debit card anyway. I use it maybe once every couple months when I need cash.

  12. battra92 says:

    @ltlbbynthn: They don’t. They care about cementing their own power.

  13. enm4r says:

    @mgy: You said regardless of the day, I think you meant regardless of the time of day. Because it is actually illegal to manipulate the date of something posting to your account.

    I’m not sure if I agree that this is necessarily in the best interest of the customer. I’d rather pay a $35 fee that have a rent check bounce…

    But alas, I don’t use a debit card, and I pay attention to how much money I have in my checking account. Not to mention, my overdraft protection is tied to my savings, so I wouldn’t see a fee unless both were under the amount written. I guess I’m not the target demographic here.

  14. Concerned_Citizen says:

    Overdraft fees are way worse than payday loans. So I would hope that not only do they make overdraft fees opt-in, they also make it so the bank can only charge an interest rate similar to a cash advance on a credit card. I would imagine people would be much less pissed and may actually may use it if an overdraft just counted as a cash advance instead of some ridiculous fee.

  15. ryan_h says:

    yeah, I think that this would be a great thing. nothing like eating at Mcdonalds for $40!

  16. mantari says:

    Banking response: The new account sign-up form will have an embedded opt-in agreement.

  17. AnderBobo says:

    YES! I generally know how much I have in my account, however on that rare occasion when I may go over by a dollar or two, I would rather just have the purchase (which I most likely do not need) be denied than be charged 32.00 for a toothbrush.

  18. mac-phisto says:

    ok, first of all, wtf is up with gawker lately. i have to sign in on every post & comments are getting lost. server migration day?
    ============
    anyway, mostly i agree with this. i think banks should definitely require customers to opt-in to courtesy overdrafting on debit cards. i don’t think the opt-in/opt-out should occur when the transaction takes place at a merchant – that would require transmission of balance information (which is NOT currently transmitted). considering merchants’ general ineptitude at securing your private data – not a good idea.

    also, sometimes (regardless of whether you opt-in or opt-out) people overdraft. will this eliminate banks’ ability to recover lost funds from people who game the system (e.g. kiters)? if so, as Bladefist indicated – expect free checking, free billpay, free anything to go away completely.

    realistically, the bank lobby will tank this, but we should see them back down on some of their least popular practices (such as the “daily overdrawn charge” & credit lines built into debit cards).

  19. doctor_cos wants you to remain calm says:

    @Bladefist: How can anyone with more than one working brain cell not think this is a good thing? You’ll still be able to opt in, so you can continue to be pretentious and condescending (in other words, Republican).

    Please take your comments and your schnide and go back to Faux News.

  20. MD4Prez2032 says:

    But how are the banks going to make their BILLIONS in profits each year?

  21. doctor_cos wants you to remain calm says:

    @mac-phisto: Kiting checks is still illegal in most states. I would think there are other ways to make these folks ‘pay.’

    And you’re saying it’s OK for banks to penalize those with less disposable income with these ‘convenience’ fees, just so I don’t lose my no minimum free checking?

    If bank A cuts out free checking, whilst bank B across the street keeps it, which bank wins?

  22. ARP says:

    @doctor_cos: What’s up with the attack, just disagree with the idea. It takes more effort to attack him than the idea. Yes, there’s a republican elephant next to his name. I don’t like it either, but get over it.

    I think this is a good idea. The consumer has the choice (which is what captialism is about, yes?) of whether he wants to pay the overdraft or simply have the transaction denied. And they can make their informed decision and take their chances based o nthat. I’d prefer to have it denied. I have a credit card for emergencies. But some, like Bladefist might want to use it for emergencies or to avoid personal embarassment (besides just being a republican- I kid).

  23. Bladefist says:

    @mac-phisto: Having the same issues as you. I figured they were trying to quiet me :)

    @doctor_cos: Woah, you’re intelligent AND mature. I don’t even get the fox news channel, wish I did. And like I said before, you may opt-out, then have an emergency and be royally screwed.

  24. Bladefist says:

    @ARP: Why you hate my elephant?

  25. Trai_Dep says:

    Hmm, a fee cascade or slightly blushed cheeks when your Big Gulp purchase is refused.
    Lemme think on this…

  26. MyTQuinn says:

    The only people who seem to be arguing against this are those that want to continue to have the service. Fine then – opt in! Am I missing something?

    That said, with all the complaints I see here involving debit cards, why does anyone use them? I don’t now have, and never have had, a debit card, and I haven’t had an ATM card in 20 years. I already have several credit cards, and I seem to have enough room in my pocket for CASH. In this situation, what benefits does a debit card provide?

  27. anarcurt says:

    There are plenty of banks out there that already offer ‘opt-out’. You just have to request it. Most people assume that if their account runs out that the card will stop working, not the case (usually). I’m sure there are some people out there who would actually like to have the option to overdraw their account in an emergency but for 99% of us, the opt-out is great stupidity control.

  28. cabalist says:

    This is about choice.

    Pure and simple.

    Financial institutions want to keep this choice from us.

    We (some of us at least) want this choice.

    Bladefist can make his choice to opt-in to the overdraft/NSF situation.

    Everyone else can make their individual choices.

    It is interesting that Bladefist uses a selfish argument (free banking for everyone who doesn’t overdraw) followed by an altruistic one (‘I would feel bad if…[they were] denied on a transaction that was critical”).

    I think the greater gift to these overdrafters would be to give them the choice of being inundated with NSF fees or not paying $42.50 for the McDonald’s happy meal they are buying on their bankcard.

    I worked in a bank back in the day in customer service. People often don’t understand that while the happy meal caused 1 NSF of its own, it often caused many more items to incur an NSF charge as well. It is common, really common, to have a person call who charged a camera before a pending deposit had cleared. The camera purchase cleared but caused an NSF. Now the account is negative. Now anything that hits the account will get an NSF, and they don’t have to pay it to charge the NSF. They can deny the charge and still charge an NSF. I can’t tell you how many times I saw that. One main charge followed by gas (+NSF), coffee (+NSF), prescriptions (+NSF), pet food (+NSF), etc. (+NSF). Quickly the deposit is eaten up by the NSFs and the cycle begins again. It usually takes 3 times in a row before the person can get it straight because of how items keep coming in.

    Also, keep this in mind. While training for customer service in this bank, one for the biggest in the country, they said, “The customer is always wrong, and you can usually prove it in under 2 1/2 minutes.” This was the basic training principle.

  29. @Bladefist: “1) More regulation? Seriously?”

    If there was ever an industry that required extensive regulation, it would be the banking industry. It protects consumers, it protects the economy, and it protects the banks.

    Otherwise, you have banks run by people who went to the Tony Soprano school of banking. Do you really want that? Seriously? The current trend toward self-policing of various industries (we’ll stop screwing our customers/the environment/the government/the troops/etc. when we get tired of it) has gotten us nothing but trouble, and you’re actually arguing for more. Incredible!

  30. Mudpuddle says:

    Choices are a “good thing” no choices are …….

  31. Hobz says:

    I honestly think it should be an opt-in feature that the bank can advertise as a service if they want. Personally, I would not want to be able to withdraw money I don’t have.

    The thing I don’t understand is why banks need to nickle and dime their customers on fees? My credit union doesn’t do this. Pretty much every service I get through them is free, no strings attached. As a matter of fact, they even reimburse ATM charges from machines that I use that are not theirs (so many per month). One year I even got a nice gift of $100 credited to my account because they made more money than they had anticipated and decided to give it back to their members.

    This is not a government regulation, but rather a way to tell banks to stop screwing their customers for services they may not want to pay for.

  32. mac-phisto says:

    @doctor_cos: realistically, the only way to make them pay is to send them to collections (collection agents generally take a 30% cut) or take them to civil court. here in ct, that’s a $35 filing fee just for the judgment. you have to go back (another $35) to get a bank execution or wage attachment (which then has to be serviced by a marshal for ~$50 per service). if a bank is not allowed to charge fees for overdrafting, that means they lose revenue even if they are lucky enough to collect on a judgment. the fees are meant to offset this loss.

    & incidentally, even though kiting is illegal, the cops don’t usually get involved unless they can get an indictment for grand larceny.

    yes, people that overdraft should be conveniencing those that don’t – just as those who carry balances on their credit cards enable others to have generous rewards, no annual fees & benefits like extended warranties, travel insurance, etc.

    that doesn’t mean i think banks should be getting away with their current policy of raking in as many fees as they can. there should be some constraint here & as i stated, banks will most likely begin axing some of their most punishing programs in the interest of halting the legislation.

  33. @Bladefist: “I figured they were trying to quiet me :)”

    If your lame-ass arguments weren’t so easy to knock down, you’d be more interesting to debate with. As it stands, I can almost predict how you’ll respond to any given topic. It is almost as if you have been given a Word document full of talking points from the Institute of Lame-Ass Talking Points, and all you do is copy/paste them. Yawn!

  34. uncle_fluffy says:

    My bank (Fifth Third) introduced a new scheme in January 07 whereby if your UNcleared transactions brought your theoretical balance below zero (not taking into account UNcleared deposits, naturally), you would get charged an overdraft fee for each of those items. Then the uncleared deposits would clear, along with the uncleared withdrawals for which you were charged. So now your statement shows overdraft fees but no day with a negative balance. Under that system, there’s no way to determine whether the overdraft fee(s) were actually warranted, even under this new ridiculous system. I could not find any bank employee, in person or on the phone, who could adequately explain to me the mechanics of this system.

    I got so sick of this and other revisions to the overdraft system that were purely designed to create overdrafts where before there were none, that I just canceled my debit card and ATM card. Now when I need cash I go to the bank and waste the teller’s time with my simple request. Their loss.

    Oh, and guess what… I haven’t had a single overdraft since then, and I haven’t changed anything about the way I manage my money or my spending habits.

  35. Geekybiker says:

    I think it either needs to be opt out by default, or warn you that you’ll incur a fee for the purchase.

    That will prevent the huge fee cascades we can have now either way you like the protection.

  36. mac-phisto says:

    @Steaming Pile: that’s unnecessary. i don’t often agree with bladefist, but he’s entitled to his opinion like anyone else. tone it down a notch.

  37. fostina1 says:

    shouldnt overdraft fees go by the same rules as the check cashing crooks.

  38. Dyscord says:

    @mgy: My bank does the exact same thing. They reorder the transactions to make it look like you go into overdaft. What they also do is update their website/phone system at the LAST moment. This goes hand in hand with the fact that they charge you a fee based on how many days you had a negative balance LAST MONTH. They don’t tell you WHEN this charge will occur, so you can call in or use an ATM to check the balance and it’ll be fine. Then you use the card for something minor and BAM! The fees come in and put you in overdraft again.

    This is a good idea because it means the banks have to stop their little tricks to get you to overdraft.

  39. Norcross says:

    @MyTQuinn: No debit or ATM card? So I assume you either (a) get paid in cash, or (b) go to the teller and withdrawal money? Considering most banks are only open when I’m at work, that’s not really an option.

    As for the opt-in or opt-out, I could care less. Just give me the ability to do it. If the majority of people won’t even bother to check it (which they won’t), why the argument for the small minority who will?

  40. infecto says:

    Personally this is a pointless rule to put in place. Banks will just make up the difference with other fees. There are banks out there that will charge you for seeing a teller (because of your low average balance of course). These accounts that hit these charges are already the accounts that lose money for banks.

    Also read above about banking processing the largest check first then hitting the smaller ones after to try and catch fees. Of course they do it, its how banks stay in business. Its your fault for writing checks without a high enough balance.

    What many people fail to see is that those of you with so little money in the banks do not matter. You are for the most part a waste in the banking system and often lose money for the banks. Why should the banks not try and make money from accounts that already provide no profit to even possible losses.

  41. Bladefist says:

    @Steaming Pile: It’s just the same with you. I always know how you’ll respond. I’m sorry you hate opposing arguments. DailyKos or Huffingtonpost may be better for you. Shield you from opposing points.

    Not everything is so black and white in this world.

  42. Thain says:

    Our current bank actually only gives overdraft protection ON free checking accounts. After a stupid mistake in the past left me owing a bank $1,000 (over $650 of which was actually NSF fees), I’m more than happy to pay an annual fee for my checking account for the peace of mind that comes from knowing I’m not going to be bent over and violated should I lose track of my funds and overspend for any reason.
    I readily admit that the mistake I made in the past was stupid, but I’ll be damned if a mistake on my part (stupid or honest) is ever going to help pay for anyone else’s bank incentives again.

  43. Trai_Dep says:

    @infecto: Hey, troll, welcome to Consumerist.
    Battered Wife Syndrome for bank customers: who woulda thunk it?

  44. NotAppealing says:

    @Bladefist: Wait, what? You start out by saying people should never ever overdraft, then say sometimes it’s a lifesaver. Which is it?

  45. Bladefist says:

    @infecto: You are 100% correct. They make money by investing the money in your account, and by the fees they collect from over drafters, and interest off loans. I guess we’re both trolls. Trolls that understand how banks work. Unfortunately we haven’t been able to find a company that wants to exist and come to work everyday for free.

  46. Trai_Dep says:

    @mac-phisto: It’s just that his comments have no factual basis, consistency or internal logic. But besides that, they’re AWEsome! :)

  47. Bladefist says:

    @NotAppealing: I’m saying you be more responsible, be an adult, and not over draft. However, the option is there in case of emergency. IE: You car runs out of gas, you walk 6 miles to the gas station, and oops, you’re denied. It would be nice if you have the ability to still get the gas, and pay the fee later.

    And to note: I’ve had friends overdraft, and if you over draft once or twice, you can call the bank and they’ll wipe the fee off your account. I’ve witnessed this many times. So in my gas scenario, you could probably get it erased. If you overdraft 5 times a month, well then you got bigger problems.

  48. Thain says:

    @infecto:

    What BANKS don’t realize is that in a lot of cases, they are likely to lose more money on these “no profit” accounts than they earn from these underhanded fees. Sadly, plenty of people who let themselves get overdrawn are more than willing to let themselves get turned over to a collections agency (and then the bank loses, what, 40%? And that’s if the collections agency actually collects the fee).

    I’ve long thought that a bank that offered a built-in high-interest credit line would be much better than this current $30-$40 NSF fee business model. You could make it a 100% interest penalty as soon as the overdraft hits. Pure profit for the bank, and still exponentially less than the standard NSF fee in most cases. Make it a 50% fee, and it’s even friendlier for the poor sap who’s overdrawn, and still turning a nice profit for the bank. Although I would still opt-out of such a program if given the choice, I would give my custom to such a bank simply because of the more consumer-friendly business model.

  49. Bladefist says:

    @Trai_Dep: More people follow me then you. Maybe you could take a lesson from my book.

  50. DH405 says:

    @Bladefist:

    “1) More regulation? Seriously?”

    Yeah, because the banking industry sure has proven itself to not need any regulation these last few years. Yeah, give the pyro the book of matches. He’ll be fine.

    “3) This is a big money maker for banks, and with idiots out there over drawing every 10 seconds, it makes all the services like free-checking, and bill payment possible and free to the rest of us.”

    So, that is pretty honest of you. You’re saying that you want the banks to take advantage of “idiots out there” to make money. Those idiots are people who have made mistakes. To just so carelessly say that the banks should be getting their payday off of the misery of these people is just greedy.

    ..Seriously?

  51. DH405 says:

    @Bladefist:

    “More people follow me then you. Maybe you could take a lesson from my book.”

    Reasonable people also listen to Limbaugh. You have to keep an eye on the right-wing jerks to know what they’re up to.

  52. Bladefist says:

    @SMSDHubbard: Yes. That’s what I’m saying.

    And do you know how many banks there are? Competition in the banking world is fierce. Every 6 months we the consumers get new free services, just to undercut the other banks. I don’t think we need regulation because of the number of banks out there.

    It’s not greedy. The people over drawing are greedy. They are the one spending money they don’t have. Usually we call that stealing.

  53. NoWin says:

    @Hobz: “The thing I don’t understand is why banks need to nickle and dime their customers on fees? My credit union doesn’t do this. “

    Easy answer. A CU is owned by the depositors as its shareholders. Think of it as your lower/no fees as your per share annual “dividend”.

    A Bank is either owned by “independent” shareholders or investors (or is privately held) and they EXPECT a return on investment.

  54. henrygates says:

    ING uses the system of an interest-bearing loan for overdrafts, rather than a fee. However unlike banks with NSF fees, ING makes it pretty clear every step of the way what the policy is, how it works, etc. I’ve never had a bank disclose their NSF fees except in tiny print in the booklet they give you.

  55. Trai_Dep says:

    @Bladefist: You actually track that stuff? That’s pretty sad, bro. Really.
    More Big Macs served than 1″ thick, home-BBQ’d burgers piled w/ homemade guac and a couple cases of iced, dark beer on a 100-degree summer afternoon. So McDonald’s is better, right?
    Dittoheads marching in robotic lockstep fail to impress most.

    Oh, how’s your Prez and his 99.5% Congressional caucus doing for our civil liberties? Thanks so much for that: AT&T sends their love.

  56. @Bladefist: You, sir, have no idea what you’re talking about. It would be called stealing if we had the option to overdraw or not to overdraw. However, since there is no option, the bank is essentially forcing people to overdraw. I personally would prefer to be declined.

  57. Bladefist says:

    @Duffin: At some banks, there is an option.

  58. @Bladefist: Well, I have yet to belong to a bank that does: Bank of America, National City, Fifth Third, Provident…Yes, I could join a Credit Union, but I have no idea how to even figure out which one to belong to and there’s no guarantee they would have an option either.

  59. Thain says:

    @Bladefist: I’m sure most banks do actually have the option to opt-out if you insist enough, but I would much prefer that they assume my choice is “no” rather than assuming it is “yes.”

    You know who is most likely to overdraft? Kids/twenty-somethings who are just starting out with their bank account and, despite their parents’ best efforts, simply don’t think about keeping track of their balance (or simply don’t keep a close ENOUGH track of the balance). They don’t even know what an NSF fee is starting out, and they assume that, if the money runs out, they won’t be able to use the money.

    The banks, on the other hand, assume that these kids are easy marks and NSF them for all they’re worth. Some learn from these experiences, some don’t, and the bank continues to exploit them. Generally the ones who don’t learn are the ones who get so many NSF fees that mommy and daddy have to bail them out. Overdraft protection is one of those sneaky, under-handed things that banks introduce to make it look like they’re protecting their customers, when they’re actually trying everything in their power to exploit them, and that’s simply bad business.

  60. Tiber says:

    @Bladefist: If banks need to prey upon people over innocent mistakes in order to generate income, then perhaps they should reconsider their business model. I would be more than willing to give up free checking for a reputable bank that didn’t try to profit mainly off the people who don’t have money.

    As for your argument about more regulations, it’s not exactly like they’re completely rewriting tax laws here. All they’re doing is changing how you choose whether or not to use a service. That’s essentially changing a check box.

    I would personally prefer that they ban making any service “opt-out” outright. When was the last time anyone saw an opt-out service that the majority of people would want anyway?

  61. pal003 says:

    “The Federal Reserve has proposed some new regulations that would, among other things, require banks to let you opt-out of the “overdraft protection” services…” We Have That Now. Although some banks don’t make it easy to opt-out of anything.

    So, again in the bank’s favor – it’s okay if we automatically enroll you in a service that may generate lots of fees for us. Gee thanks, oh-so-not-helpful Fed Reserve idiots.

  62. uncle_fluffy says:

    @Bladefist:

    “It’s not greedy. The people over drawing are greedy. They are the one spending money they don’t have. Usually we call that stealing.”

    I’ll refer you to my comment above.

  63. infecto says:

    @Trai_Dep: I am sorry you feel the need to be rude.

    Not sure why you think I am a troll or that I am loving on commercial banks either. I guess if you have had troubles with spending habits in the past I can understand being bitter. It seems to me that you are more of a troll then myself. I am only pointing out the obvious.

    Despite what people may think commercial banks know what they are doing and that includes both large and small institutions. They can nickle and dime you to death if you do not use common sense along with good spending habits. The whole goal for a commercial bank is to screw grandmothers (only an expression). They love to offer 1yr CDs to older people at wonderfully low rates and then take that money and loan it back out at a much higher rate. Its the nature of the beast and always has been.

    My point is this is how banks make money. This is how they are able to offer free checking/$0 balance checking. The people who get NSF fees or overdraft fees or anything along those lines are the same people who have very low balances and this is how the bank profits off of them. Its simply a business model like any other.

    For the record I have never had issues with a bank and have never had to pay a fee of any type. Its called common sense and good spending habits.

  64. infecto says:

    Oh and for the record Credit Unions are not banks and do not follow the same taxes and rules so therefore generally offer not only better service but better rates on both lending and investment.

  65. uncle_fluffy says:

    @Norcross: Yes. I go to the bank to get money. That way I get to keep more of it. Apparently that’s the only way that works under the Fifth Third Immaculate Overdraft ™ regime.

  66. mike says:

    @Bladefist:

    1) More regulation? Seriously?

    I absolutely agree. But when corporations fail to do the “right thing”, I believe it’s necessary that they be forced to. Granted, there are many industries that don’t need oversight. But I must say banking isn’t one of them.

  67. Bladefist says:

    @linus: You know, I have a bank here in KC, MO, I pay nothing for checking, nothing for bill pay, I make interest, and I totally use them for everything. They making nothing off me. Nothing! I don’t do any of my loans through them. If they want to take $40 bux when I over draft, they deserve it! I’m already a cost to them, why should I be an even bigger cost?

    If you have an over draft issue, most banks, on request, will let you opt out. We don’t need regulation. It’s already available. If you’re too lazy to fix your own problems, then you suck at life. Where am I wrong here?

    If my account was always under 100 bux, I would call my bank and opt-out. If they said no, I would switch banks.

  68. rhodesman says:

    Finally!!! The day will be mine when I can kick the over draft BS out of my account!!!

    It’s not that I don’t have money, or don’t know how to use/spend it. It’s just that I have one account that I use as my “play money” account and in that I put money in so I can buy stuff I don’t need but want. This works great except for when the bank takes an extra day to deposit my money from my savings into my checking and doesn’t tell me. So I go into the store thinking I have money in my account for that purchase when in fact it won’t be there till the next day!! If I tried to buy it and the purchase was rejected, I would say: “ooh okay, I’ll come back tomorrow” no harm done. But when I buy that item then check the account to find out it’s been hit with an overdraft, I get a little angry…

  69. @Bladefist: I have no idea what bank you’re talking about. My current bank, National City, does NOT allow you to opt out. According to them, there isn’t even an option to set that up in their system. So why dont you inform the rest of us of these magical banks that let you do this?

    @infecto: As for you, I flat out don’t believe you. Your whole life, you haven’t once had a bank fee. Right…anyone else believe that? I know you don’t care if we believe you or not: this is the internet afterall. I just wanted you to know how nearly impossible that statement is.

  70. azntg says:

    Heck yes, even an “opt-out” choice is preferable to a choice that doesn’t exist or count for anything. If anything, the Federal Reserve’s decision will bring this issue a little bit more noticeable than it is right now.

    @linus: Couldn’t have said it better myself.

    I too believe that free market / laissez faire policies should dominate until the businesses cannot be trusted to do the right thing anymore. In my opinion, businesses should achieve a good balance between serving the majority of its customers in a fair, equitable manner and earning its owners/operators a reasonable profit.

    Banks are a special case though (and historically, they always were). Even though some banks are definitely better achieving that balance I just mentioned than others, the lack of regulations and the current banking system (through the fractional reserve system) that’s in place today just doesn’t mix and match.

    Arguably, the recent subprime mortgage crisis is one of the nasty side effects if neither side gets checked for too long.

  71. Trai_Dep says:

    @infecto: Just so I have the analogy straight: you’re saying the battered wife deserves it (that skank!) and that Mr. Banks only hit the Misses with his Fists of Love. Got it. Thanks!

    Ahem. The thing about this is few electronic transactions are spent for emergency situations. Having a credit/debit card being declined wouldn’t bother the majority of people – they’d probably just whip out another one (not ideal, but hardly a life-ender). It doesn’t make sense that banks wouldn’t prominently make it known that this option is available, and have it be opt-in. Unless it’s out of greed.
    I’d have no problems with the banks offering this “service” if some rube agrees to it. Buyer beware, but hey, you make your own bed too. It’s just that the banks have to go the extra two-step to rip off the unwary. THAT annoys.

  72. MrEvil says:

    Ah, how I <3 my Credit Union, Overdraft protection is a line of credit to them. No NSF fee if you use it, but you do pay interest on the balance. However, I opted out of the credit line and just use my savings account and funnel enough money for groceries and gas into the checking account. Need more money? A 5 minute phone call can instantly shuffle money from one account to the other.

  73. NoWin says:

    Last I knew here in the US, free enterprise and the right to “choose” many of our business affiliations (i.e. a bank/CU in your city or town, car-dealer, big-box store, etc) allowed even the “unwary” to enter into what may be preceived as a bad or slanted contract or deal, especially if the consumer opts not to ask consumer-based questions, read the disclosures, monitor their account, or at the least, shop wisely.

    You are a consumer until you utilize a bank’s services. Then you become their customer. Once a customer, if you don’t like your partner, vote with your feet.

  74. hexychick says:

    The thing I hate about the overdrafts is that they take the biggest amount first so they can charge you out the ass for the 10 small ones. I’d be happier if I had the option of syaing “take the small ones first, THEN the big one”. Another thought: What about an option from the bank that says if you opt-IN for the fees, they reduce them to like $20 or less? I’d stay in if they were lower.

  75. @NoWin: We actually have a socialist and capitalist system here in the U.S.

    Private industry is often unwilling to put in place certain safeguards for consumers, and when your much beloved deregulation leaves us with the majority of banks owned by less than a dozen financial institutions, choices for the consumer becomes very limited. This is when some rules are helpful. Believe it or not, you might have noticed that when left to its own devices, the banking industry tends to keep going bankrupt. This happens a few times every century in our country and the consequences are painful.

    As people like you are wont to say, if you don’t like it, vote with your feet. Move away to another country.

  76. I agree that opt-in or opt-out, just the OPTION to have this will be great!

    I can’t believe this got by Bushco. I suspect they just don’t understand what it is the Reserve is doing.

  77. ..

  78. MyTQuinn says:

    @Norcross: I don’t get paid in cash. However, I am self-employed and go to the bank at least weekly to deposit payments from customers.

    As far as making an argument for the minority – I wasn’t intending to. I really think the ability to “opt” that is key. I don’t see why changing the default should be that much of a problem for people.

  79. cabalist says:

    @NoWin & Bladefist: I think that is the point. Free enterprise includes the right to choose. This is the right that the government wants to prevent the financial institutions from allowing us to exercise. Essentially, these offending financial institutions, probably most of them, are trying to obfuscate the situation and not allow us the right to CHOOSE.

    Preserver this right, and do not allow private companies to take it away.

    In this instance it is governemtn doing what it should to look out for and safeguarding the rights of its citizens.

  80. @Bladefist: have a bank here in KC, MO, I pay nothing for checking, nothing for bill pay, I make interest, and I totally use them for everything. They making nothing off me. Nothing!

    Of course they make money off of you. The interest they pay you is less than what they earn when they loan your money to Trai_Dep for his new double-wide. Once upon a time, banks like Wells Fargo made most of their money through such savings and loan schemes. But today, Wells Fargo pulls somewhere around 50% of their income from fees.

    I’m staying neutral on whether or not the Fed should step in, but this table from the Federal Reserve is great:

    Ways to cover your overdrafts: Example of possible cost for each overdraft
    Good account management: $0
    Link to savings account: $5 transfer fee
    Overdraft line of credit: $15 annual fee + 12% APR
    Link to cash advance on credit card: $3 cash-advance fee + 18% APR
    Courtesy overdraft-protection plan: $20 to $30
    Bounced check: $40 to $60 ($20 to $30 bank fee + $20 to $30 merchant fee)

    See? Free overdraft protection is already available!

  81. doctor_cos wants you to remain calm says:

    @Bladefist: And at many, there is not. What is the problem with giving everyone the option?
    Too many banks give out the bs “most customers seem to like the protection” … at $35 a pop?

    And yes thank you, I do consider myself intelligent and mature (as well as fair and balanced).

  82. RedSonSuperDave says:

    EVERYTHING should be “opt-in”. I will be sending the Federal Reserve one of those e-mails.

    @Bladefist: Is there a more politically-oriented forum somewhere that you post on? I’ve got a lot to discuss with you, but nearly all of it is off-topic here, and I don’t want to spam up the comments.

  83. AcidReign says:

        I’ve been using the same overdraft protection plan, for years. Keep $1500 to $2000 in the account, that you don’t even show on your checking and deposit register. When you think you’re down to zero, you’ve actually still got 4 figures in there.

        This assumes, of course, that you balance your checkbook. I’m continually amazed by all of the people who admit that they take the bank’s word for it…

  84. Bladefist says:

    @Michael Belisle: I coughed up my beer. that was hilarious. Love it.

    I know the bank makes money off my money, I meant, I don’t directly pay them for anything. Although, either way I’m kind of right, because after i deposit my money there, I transfer 75% of it to savings accounts, stock accounts, money markets, etc. So really they make interest off a very small part. I just leave enough in there to pay bills

  85. Bladefist says:

    @RedSonSuperDave: well no, but I’m always up for a debate. We can figure it out in private in our user profiles. I only troll here :)

  86. Bladefist says:

    @doctor_cos: Well, I think competition will force it. Already there are many banks that let you opt out. I’m glad you are fair and balanced :) HEY! I know a media outlet that is fair and balanced!

  87. infecto says:

    @Trai_Dep: Let me get this right you are trying to compare the banking system to physical abuse. I never acknowledged your flawed analogy before hand and still do not. Come again and please make some sense next time.

  88. AustinTXProgrammer says:

    I can handle opt out in this case…. You only have one or two, even 10 banks. But its a finite number…

    When it comes to spam, opt in is necessary because there is no limit to the number of times you would have to opt out.

    Opt in is better, but I would rather opt out than fight this to the point that we get nothing at all.

  89. mozilla says:

    At my bank you have this option on your debit card/checking account, sort of, it’s called a “Matrix Allowance.” That is the amount that, for instance, the debit card will let you overdraft your account (before it starts to deny your purchases). You can call to see what yours is and have it set to zero, although they don’t recommend it.
    I know, I know, it’s because they want your overdraft fee money, but it also helps in an emergency situation. If you are out in the middle of nowhere and for some reason all you have is your debit card. Say you need gas but you don’t have enough funds and are willing to OD your account, with your matrix allowance at zero, you wouldn’t be able to.
    They say it can take up to 24 hours to update changes, so a call to cust service at that point wouldn’t do you any good. Thus no matrix allowance to OD your account also means no gas.
    The point is that you can set it to zero at certain banks so you don’t OD your account. Just be aware that you can still get charged for checks, a return item fee is different.

  90. geoffhazel says:

    @Bladefist:

    sometimes emergencies happen, and you need cash.

    That’s what payday loan places are for. The bank isn’t going to let you overdraft more than 50-100 bucks and that will be in small increments.

    Or write a hot check to the grocery store if you MUST but thinking that a little overdraft on your debit card is going to save the day is wishful thinking.

  91. geoffhazel says:

    comment via email or at this web-form link:

    [www.federalreserve.gov]

  92. VoxPopuli says:

    I’m way late to this thread – but thanks for this post. I’m dealing with a fraudulent charge on my visa check card that overdrew my account.

    My bank has put the money (including overdraft fees) back into my account. But when I asked why they even approved the charge when I didn’t have the money, they said they had to. Nice to know that you can change that default.

  93. HiramNewt says:

    Tell the Fed Reserve to ban shady bank overdraft practices ($17.5
    billion/yr) >>> http://twurl.nl/js6ewv [ConsumerAction.com]