Stop Hungry Hungry Hippo Banks From Gobbling Your Bucks

Oh noes! The Hungry Hungry Hippo Banks are trying to gobble up your happy money fish! You only have 5 days left to get them to stop by writing the Fed and saying NO to banks default stuffing you into an overdraft fee programs. Send an email to regs.comments@federalreserve.gov with “Docket No. R-1343″ in the subject line. Or you can use this online form.

PREVIOUSLY: Tell The Feds You Want A Choice On Overdraft Fees

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  1. Cat_In_A_Hat says:

    Honestly if I were in danger of overdrafting with a purchase, I would rather the transaction be denied rather than have the bank do me a favor and “spare me the embarassment” of having my card decline. If someone doesn’t have $4 in their checking account to cover the purchase their morning coffee, what makes a bank think they will be able to cover the $28 racked up in overdraft fees? What even bothers me more are so called “overdraft protection” accounts which still charge you a fun little fee for the “convenience” of transfering money from your linked savings account. I just don’t understand the world we live in.

    • magstheaxe says:

      @Cat_In_A_Hat: That’s the whole point–the banks make more money off overdraft fees that almost anything else they do, so they’re constantly looking for ways to hit you with fees.

      The customer-service focused way of dong business would be to deny the transaction due to insufficient funds. But that would mean the banks would make less money.

      • Cat_In_A_Hat says:

        @magstheaxe: Understood. It’s a business and what business doesn’t want to make easy money, but it’s a pain for some consumers. I understand a fee of this type allows for the majority of banks to be able to offer free checking and savings accounts to the bulk of consumers, but charging multiple overdraft fees for the same transaction is just wrong. I’ve overdrafted once in my lifetime (I was 18, spent my summer in Europe and returned home with -$6 in my checking account) and after being charged a $30 fee I learned my lesson and signed up for “overdraft protection” and was still hit with a $10 fee with this feature when using my debit card for a purchase that I believed would be covered by the money in savings. By no means should banks make exceptions for those who abuse the system and use their debit card to make a purchase with non existent funds, but for the average consumer who may have an oops moment, piling on fees and putting that person deeper in the hole just seems wrong. My 2 cents.

    • SergioDingo says:

      @Cat_In_A_Hat:
      I used to be a person who completely agree with you.

      Last week though I found out my checking account I used to pay my rent was overdrawn. I’m very happy the bank decided to let that check post and charge me an overdraft fee rather then having it bounce.

      If you don’t have $4 in your checking account, perhaps you should skip starbucks.

      • howie_in_az says:

        @SergioDingo: The irony of your post is great indeed.

        If you don’t have rent money in your checking account, perhaps you shouldn’t be writing checks that will bounce. Most (if not all) banks have a website you can use to determine the balance of your account, why didn’t you use it before writing a check for your rent? You assumed the money would be there, right? Perhaps it’s the case for others that overdraft their $4 lattes.

        It kinda sucks when someone uses the same logic against you, doesn’t it?

        • Anonymous says:

          @howie_in_az:
          The trouble is when the instantaneous transaction takes two weeks to post. I was traveling, and got gas. I couldn’t remember if I used cash or my card(I did use my debit card), so I closely monitored my balance online for ten days. The gas transaction went through on the 13th day. Thankfully, the branch manager at Flagstar returned my overdraft fee. Long story short, online banking is not terribly accurate, and businesses that do not post their charges responsibly only exacerbate the problem.

      • nakedscience says:

        @SergioDingo: Maybe you shouldn’t be paying rent if you don’t have the money in your account? Just a thought…

        And I made a dumb mistake yesterday: I went to get a prescription, and pulled out the wrong card — my small-limit Visa credit card instead of my Visa debit card. I was near my limit on the credit card and the prescription cost would have caused me to go over my limit. Thankfully it was DENIED, and I realized my mistake. Had it been the other way around, I’d have been PISSED. Sure, you could say I should have been paying more attention, but I was very sick and just wanted my damn pills and saw “Visa” and went “HERE GIMME MEDS GIMME NOW NOW NOW NOW”.

    • SabrinaFaire says:

      @Cat_In_A_Hat: AGREED! We ran into this problem at Christmas. One thing got charged way more than it was supposed to and b/c we were out of town, we didn’t notice. Well add up some gas and fast food during traveling and things just snowballed. It was until we were $400 in the hole that we were denied and found out there was a problem. I know we should have been keeping a better eye on it but we really would have been fine if that first transaction hadn’t been 5X more than it was supposed to be (whole other story there). That policy and the fact that they would not turn it off is why we left that bank. We’re now with a Credit Union. They have the same “feature” but we can opt out if we want.

    • smallestmills says:

      @Cat_In_A_Hat:

      When I was younger and living paycheck to paycheck, it was usually a matter of robbing Peter to pay Paul. Sure, my account might not overdraft, but I still had pay the car note and rent 3 days before payday. Since checking account overdrafts don’t hit credit history and late car notes do, I would make the decision to purposely overdraft my account, as it was less than a bounced check or late fee for rent or the ding on my credit. For me, it was kind of like a very high interest loan.

  2. discordance says:

    I’d really like to meet these people that are ‘embarrassed’ when their card’s declined. I’m envisioning each of them being like Hyacinth Bucket (“It’s Bouquet, dear.”).

  3. SynMonger says:

    I’ve even asked to have this “feature” turned off at several banks, and all have refused.

    • SynMonger says:

      @SynMonger: Woops, that feature being banks letting transactions go through on debit cards even when there isn’t enough in the account.

  4. Samanthrax says:

    @Cat_In_A_Hat: That would be so nice if they were doing it to save the consumer embarassment, but really, they’re just doing their best to suck you dry. How servicey!

  5. Russ Savage says:

    @SergioDingo: you work at bank of america don’t you. go to hell

    • Blueskylaw says:

      @Russ Savage:
      Darn, you beat me to the punch.
      Did he just thank a bank for charging him fees?

      @SergioDingo
      “If you don’t have $4 in your checking account, perhaps you should skip starbucks.”
      It seems like you don’t patronize Starbucks and yet you still overdrew your account. What gives?

  6. conedude13 says:

    the only reason i see the purpose of the fees is literally just to give the banks more money! i would be fine with them if they hit me with the fee AND honor the transaction. if i were to get one and not put more money in the bank and leave it negative (which can happen since i don’t watch the bank like a hawk) the charge they gave the the fee for will STILL get declined!!

    the whole banking system is a friggin scam!

  7. cuchanu says:

    @Cat_In_A_Hat:

    Since Chase took over WA MU I’ve had my card denied regularly for no apparent reason. So FUCK THEM. I have to “suffer through the embarrassment” of having my card declined when I have money, So I can deal with it if I don’t.

  8. John Ernst says:

    @Cat_In_A_Hat:

    You can actually do this, I had to argue with PNC for almost half an hour, and threatened to change banks and they finally gave in. No more overdrafts.

    You might have to fight but its definitely possible

  9. bigdave914 says:

    This is why ING Direct’s Electric Orange rocks so much. Instead of overdraft they give you a line of credit. Mine is $165, I can use this like its my money and just pay interest on the used money. Usually the interest earned on my checking is more then I pay to borrow the money so it works out perfect. No I don’t work for them just got tired of BoA bullshit.

  10. oneandone says:

    If you have the time, you might wantt to read the proposed regulation. There are a lot of specific things they’re interested in hearing feedback about. For example, if the regulations require banks to offer a ‘reasonable period of time’ for people to opt-out of overdraft services & fees, what is a ‘reasonable period of time’? 30 days? More? Less?

    They also ask if you’d rather the regulations have an opt-in for the overdraft services or an opt-out. And if debit transactions (in person or online), ATM withdrawals, and checks should be treated the same way.

    Lots of interesting questions, and worth it to give them specific feedback.

    Here’s the federal register notice:

    ([www.regulations.gov]).

    If the link doesn’t work, you can go to http://www.regulations.gov and type the docket number (R-1343) into the search field. The first result (“electronic funds transfer”) is what you want.

  11. swagv says:

    Banks have been playing a shell game with my money as it is for the past several years. It seems that every other statement I’ve received since 2000, I learn that my account has been sold off to, or merged into, some other bank du jour.

    I think this is a game of float, so that when you actually need to get your money and yell “stop”, there’s no way of tracing who has your money anymore.

    (Thankfully Wall Street has been protecting me from that problem since last Fall.)

  12. sean98125 says:

    We earn 3.5% interest on our checking account on balances up to $25,000. We don’t worry about overdrafts since we have a lot of our savings there.

  13. Velifer says:

    …but mine is free, with a rate lower than a new purchase on a credit card.

    There are so many more insidious things banks are doing (reaping the benefits of Check21) that should be stopped.

  14. say what?! says:

    @bigdave914: I was just about to talk about ING. I overdrafted once because the check I had deposited hadn’t cleared yet. (It was the only card I had. I lost my wallet and luckily I don’t carry my ING debit card in it.) Anyway, I overdrafted about $100 (I only use the account for the billpay, and I transfer the exact amount of the bill, so the account sits at $1.00 most of the time). The “fee”, really interest, was $.04. yes, FOUR CENTS!

  15. Whiskey Tango Foxtrot says:

    @SynMonger: Same here – I’ve been told its not even possible to turn that feature off!

  16. Whiskey Tango Foxtrot says:

    I know some people like to say “Well if you handle your money better, keep track of your account balance, and/or forgo that $4 latte at Starbucks you won’t get slapped with an overdraft charge” but what about situations (they’ve been reported here on Consumerist) where somebody has had their debit card charged for 10x more than it should have been? If that original charge had been denied, then it wouldn’t start a cascade reaction of later charges (rent? insurance? food?) that were made because the owner of the account believed there was enough funds to cover those debits!

    • christoj879 says:

      What about overdraft protection onto a credit card? I have PNC, and instead of overdrafting, they charge me $10 and pull the money in multiples of $100 to cover the charges, charged to my PNC card. This has happened maybe twice when I was negligent in making my deposits or transfers from my MMA.

      But seriously though, I’m not trying to sound like a bastard, but WHY?!?!?! do people still use debit cards? Come on, an AMEX charge card (not credit) or low-limit credit card still isn’t hard to come by, use that (and DON’T spend what you don’t have) and you’ve got all the magical benefits of having a credit card. I can see using a debit card for ages 15-18, but beyond that you’re asking for trouble.

      TBH though, most people are stupid and the banks love it. I love having a free checking account that I do more with in one month than most people do in a year, and I also love having cookies and tea and coffee waiting for me at the bank paid for by your overdraft fees.

  17. calchip says:

    By law, the banks MUST turn off the feature if you ask, but you may have to go through a dozen people before you find one who knows what you’re talking about, and how to do it. (This has been covered on Consumerist before.)

    At Bank of America, the feature is called “Pay No NSF”

    Also, sleazy banks (like BofA) have a habit of magically turning the feature back on after a certain number of months, then denying they’ve done so, so it is wise to call a couple times a year and confirm (and get the agent’s name and employee ID info) that it’s still on.

  18. nakedscience says:

    I pulled out my small-limit credit card instead of my debit card (both have Visa logos and I was siiiiiiick as a dog) to pay for my scrips, which was wrooong because I was near my $200 limit and the scrips would have gone over. Thankfully it was declined (twice!) and then I was like, “OH CRAP WRONG CARD HAHAHAHA.”

    So you know, mistakes happen. What if it had been the other way around? I’d have been PISSED if my debit card hadn’t been denied. I pay close attention, but shit happens sometimes. Like when you have a UTI, tonsillitis, and a bad cold all at once.

  19. Anonymous says:

    Alright I’m no fan of overdraft charges – the banks are obviously money grubbing – but… in an albeit weak defense: let’s say I have $50 dollars in my account. I use my debit card to go spend $20 at one store, $20 at another, and my wife uses her debit card, same account, to spend $20 at a third store. All three are done as credit transactions, all three go through because there’s $50 in my account and none of these transactions will post on my account until tomorrow. All three post tomorrow and bam, I’m overdrafted. Now come the fees. Fees suck – yes – but what if they didn’t exist, or were only a few dollars? No doubt, at all, that a significant number of people would abuse the above scenario to spend more than they have, which would cost banks millions. The fees are there for profit, yes, but also to protect the bank from fraud.

    Now, what if a bank were to come along and offer a 2 or 3 day grace period to get your account out of overdraft status before incurring fees (as long as the total overdraft was less than, say, $50)? Hmm, protecting its business and its customers at the same time… I guess I just shot my original argument to hell. Never mind.

  20. zyodei says:

    The question is, if your card is declined, what happens to those vendors who don’t make the charges instantly, but wait till the end of the week to post them all in bulk? Would they have to deal with the equivelant of bounced checks?

    Maybe it would be an incentive for them to stop dragging their asses. I once overdrafted like 10 times because of one charge that the guy posted 2 weeks after I purchased. Grrrrr…

    Everyone who comments here, PLEASE ALSO FILL OUT THE ONLINE FORM ABOVE! The Fed doesn’t read consumerist ;)