While I'm all for supporting banks not gouging the consumer, people forget that banks are a business and they need to make money

I see this going two ways... banks will either fake how much processing is (who's going to check up on that?) to make their fees seem legit, and a lot of people are going to cry foul over any fees, even if they DID do something like go over their limit...

I dunno, I somehow don't see this ending well.

there's a difference between being a money making business and completely screwing people over. banks did fine before overdraft fees.

Heh.

Extra storage space for online statement for late fee: $39

_

Uh yes, uh you see harddrives cost about $5000 per megabyte so um..

Socialists! How will the banks be able to afford to pay those six to seven figure bonuses now?

If the SOBs (yes, Wells Fargo, I'm looking at YOU) would cash the checks in the order they arrived, I might have some sympathy for their woes. But damnit, they cash the checks from largest down to smallest, thus garnering the maximum profit from bounce penalties.

If they care not for my woes, I care not for theirs.

@voteccow: Yes, banks should make money. But they should not make money, a large percentage of their revenue, on "fines" for violation of terms. Anytime you depend on people's mistakes to make $60 billion, there is something seriously wrong with your business model.

They should make money on the difference between what they pay out in investments (savings, CDs, IRAs) and what they bring in in loan interest. They should also get rid of 'free checking with no minimum balance'. Checking accounts cost money and consumers need to be realistic. Of course, if the bank is making plenty of money off your business (a couple of savings accounts, a line of credit, perhaps a mortgage), the fees might be offset by other revenue.

Unfortunately, many banks have left the business of actually loaning money. They may originate a loan, perhaps even hold it for a while...but many sell it, perhaps as a security, so they can earn a quick buck. Something they criticize the consumer for doing.

We are doing the same thing to banks here in the UK. So far they have been unable to justify their charges, but they are appealing the case.

Prior to the suit many people were submitting claims for unreasonable fees and were collecting.

@rolandsherpa: true, point well made

Congress pass a law to actually benefit people other then themselves or those renting them? Yeah right!

How about storage fees of car at garages? How about proof that the steak cost $15 more than hamburg at a restaurant? How about restaurant wine markups? What about $100 aspirin at hospitals? A slippery slope.

I really think when banks started doing this we should have closed our accounts there and opened up where they didn't. If we had, then the banks would have seen the value in not doing this. We didn't so, they knew they could get away with it.

it seems that banks are becoming a public utility, and are being forced/shamed into charging only what it costs them to provide certain services.

How about we extend this reasoning to record companies, movie studios, text messages, and Apple products? It would save us billions.

@voteccow:

Banks are business yes, but their "business" is that they hold your money in a safe place while allowing you access to it. As such they use your money to invest or loan out to other people and charge them interest.

A grocery store is also a business would you be ok with them charging you for purchasing to many apples in a month? Or leaving your items on the scanner for to long. Or how about charging for the right to use their self checkout isles?

Business are in business to do and make business, not to charge fees for insignificant reasons.

I am not sure I would call Australia an "enlightened nation". What with their rampant internet censorship and all.

@EllenRose: It shouldn't matter what order Wells Fargo or any other bank posts your checks and check card purchases in...as long as you have the money to cover all of your charges. However, if you are spending money that is not your own and getting a short-term loan from the bank (read: overdrawn account) then you deserve the overdraft fees. Keep a check register or journal to keep a running balance on your account, set up overdraft protection, and you'll be good to go. It's simple, basic, 1st grade math to balance a checking account people....please do it!

@rolandsherpa: I would rather them make it off of fees I can avoid by being more diligent than for them to up the costs of bank accounts to everyone.

Cosumerist's view on enlightenment is a little slanted.

There are always unintended consequences of these types of things. The rule will automaticaly turn the most profitable of customers into unprofitable pains. I could see some people getting their accounts closed.

Banks will have to stop doing the "Free Checking" programs as they have done over the years. In my life, I've never had to pay for a checking or savings account, or any of the advanced features that have come along with it (bill pay, online banking, etc). While ridiculous fees and over-draft charges are one thing (ie, with people who get $500 charges after making one over-draft, but then the bank continues to try to get the money, or something)... free checking and free savings accounts come with some of that risk: you have to follow the rules and read the fine print or those "Free student checking" don't remain free.

@WiglyWorm: People in glass houses shouldn't throw stones.

Didn't people notice that the rise of excessive fees coincided with the rise of free checking accounts and other free stuff? For instance, my bank will refund the ATM fees that I pay to other banks. On my free checking account. In essence, they're subsidizing my account with money from people who pay the penalty fees. As someone who never pays those penalty fees, I'm happy to allow that to continue.

One idea for the US: Make the banks unable to take these fees from your account without your authorization. If they charged such a fee you would have to actively pay it, instead of them just grabbing what they want from your account. That way they will be saddled with collection issues and you will be able to close your account with them before the fees are taken if you so choose.

@kepler11: And cost us a free and open market society, but hey that's not PC anymore so whatevs.

This is all part of the program of "transfer of the wealth" from the people who create it through their hard work and sweat, to the lazy people that run banks and large corporations.

@frank64: Indeed, the unwashed masses would make better Jerry Springer contestants than consumers. Unwise consumer, you get what you deserve!

Is it THAT hard to find and join a credit union? Really?

@Cant_stop_the_rock: Way back in the 1960's when I had my first bank account, this was not true. The checking account was free. Fees did exist, but they were not excessive. The bank made their money from making investments using the deposit base. Many smaller "home town" banks and credit unions have fees smaller than the corporate banks.

See, I am not on the boat of penalizing my bank. I misfigured last month when my husband's place of employment got a new company for their direct deposits. I had two debits clear through on Thursday, when he used to be paid, and I forgot that they had changed the day to Friday! Whoops. And lo and behold, I didn't even remember this until I was on the phone with a supervisor for my bank, where she noticed the discrepancies in the day the deposit was made from the check before. She pointed out that the last check went through on Thursday, and all others before that seemed to have also done so, but this one went through on Friday. She thought it was an error on their end at first until I remembered. Anyway...

My bank has a tiered penalty system. You sign up knowing, for instance, that your overdraft fee is $41 at the time of sign-up, but could rise if your account is not maintained. My overdraft fee was $21, however. If I had gone 3 years without an overdraft, it would have been $11, and 4+ would have been no fee for up to three overdrafts before moving back down the tier, 11, 21, etc. However, you can also move up this tier, as high as $81 per overdraft, if you mess it all up that badly. Though, you have to be bouncing checks daily to get up that high. And if you get three $81 overdrafts, they suspend your account until you come in and fix it. So. I like the idea of benefiting the good and punishing the bad. But my bank isn't so bad, so I don't have any reason to punish them.

@I am Mrs. Nerdtastic.: I forgot to add, that at the end of dealing with the supervisor, we agreed to just one fee instead of two. Sometimes, they can be dealt with.

@frank64: An account that sits idle with $60 in it is very unprofitable. Yet banks don't go around closing those now.

Of course there is a cost to the bank when events happen like a check kicks an account into the negative ... or would do so if the check is honored, but doesn't because the bank chooses not to honor it due to insufficient funds. For example, there is a cost to send a notice to the customer that either an item was not paid, or that the account went negative because it was paid. That cost should be paid by the account holder. But it does not cost $35 to send it. And it most certainly does not cost $140 to consolidate 4 items into one letter.

All businesses should be making their money in their core business, and recovering their costs in everything else.

I don't mind banks charging penalties for legitimate reasons but they should have to clearly disclose their penalties and processing costs and not be allowed to charge penalties beyond a specified amount or percent of their cost. They shouldn't be able to invent penalties for the purpose of profit and therefore end up encouraging (through their business practices) people to get hit with them.

I remember when I opened my first bank accounts in the 1970's that I could 'attach' a savings or specific overdraft account to my checking account. If I overdrew my checking account the money would come out of the attached account, no harm, no foul, as long as I didn't also end up overdrawing the attached account. It was fair and it was easy.

@Skaperen: except that it's not that unprofitable, because it is idle and requires no man hours to maintain. And they do actually close them after a year or 2 and send the money to the government ( when/how it happens varies by state law.)

"Wouldn't it be great if *ahem* our own Congress passed a similar law?"

Right, so those laws, like any other law will be written by the 'big boys' lobbyists, in order to minimally impact them, but cripple smaller competition. This is typically what these laws you call for to 'protect' you do.

How about if you don't like your bank's fees, move your money some place else and encourage others to do the same.

People want to do way to do way too much American Idol watching, and want to slough off the job of protecting themselves to someone else (gov't) which in the end ALWAYS does more harm than good.

@Shoelace: Explain to me why banks shouldn't be allowed to set their own pricing like every other business out there? If they want to charge $100 for an overdraft and you are too lazy to look for an alternative account somewhere else with better terms, then shame on you not the bank.

In today's world, with these "excessive" fees, 60% of most banks customers are un-profitable. It seems everyone wants all the services a bank provides, but everyone somehow thinks a bank can just do it for free. The fact of the matter is that interest margins are much smaller today than at any time in the past. If the banks weren't charging these fees we'd all be screaming that loan rates are too high, or deposit rates are too low.

The bigger question is -- how many of you that complain about fees have actually taken the time to shop for an account with better fees? Have you checked for a local community bank or credit union? Have you looked into alternatives such as brokerage accounts? Most credit unions still over the automatic overdraft protection from savings accounts that Shoelace mentions. Problem is most people with overdrafts don't have money in savings to cover them.

For me the bottom line is that I don't want our government to be in the business of dictating to private business what they can or cannot charge for their services.

@voteccow: They should deny things when the account hits zero and make these fees opt-in.

Oh, and no bank will top free checking. They would lose all their business. Smaller banks don't go fee happy and usually not only offer free checking but the one by me offered 2 free foreign ATM usage a month. Basically they pay the 3.50 ATM charge up to two times a month.

Banks look at things they see happen a lot and decide to add a charge for that purpose. It's not to finance free checking(usage of your money pays for that), it's to make crazy profits where there weren't crazy profits. To prop up the short term stock price.

@Eldritch: I don't see how they can. Everything is automatic. There are no people involved. The fees can't be anything significant.

I am tired of the government making so many regulations to tell business' how to run and how to price their services. Anyone ever heard of Caveat Emptor? Buyer beware....educate yourself before buying into something. It seems like more and more people are whining to the govt about something they knew about and didnt seem to worry about until they experience it.

Its not up to the bank to make sure everyone know service fees beyong giving the client the info, it's up to the client to READ the info provided.....if people don't like the service fees....go somewhere else.

I have been a BOFA customer for like 20 years now.....when they were NationsBank, signed up for free Alpha checking, no fees as long as I had a direct deposit once a month. No problem there. Had 1 issue where they debited someone else' check from my account, small dollar amount, no biggie. They pulled the check in question and fixed without a hitch. No other problem in all the time.....

Bottom line people, do your homework before criticizing a banks, or any other business' practices. The info is out there, don't make yourself look ignorant. It's not like they make up stuff on the spot.

@voteccow:

"While I'm all for supporting banks not gouging the consumer, people forget that banks are a business and they need to make money"

Why do they need to make money? Credit unions do just fine without outlandish profits and schemes for more profits.

The whole banking paradigm in the U.S. is bonkers. Private enterprise has absolutely not produced any better banks or products for consumers.

@diangelo: I never said America was particularly enlightened, either, now did I?

In fact, if you want my opinion, you'd be pretty hard pressed to find an "enlightened" nation anywhere. Perhaps switzerland, or tibet, or perhaps canada, but I'm not even sure about those.

@MichaelBrazell: Free checking accounts => debit cards => merchant fees

@twophrasebark: Of course they NEED to make money. They have investors, they have employees, profits are required. The issue I take with the making money is that with all these massive profits, why are savings accounts bearing so little interest? Savings account rates are so low that everyone plays the market instead and then when it crashes, people are told "don't invest more than you can afford to lose".

@frank64: I dunno, they only have to proove the fee is reasonable. There's nothing to say they can't make money off of the fee, but they shouldn't be making say 10,000% profit off an overdraft fee. If it costs 10 cents to process an overdraft, and they're charging $20, that's a pretty big markup.

See, if when you bought something and it would put you into overdraft and the bank sent a message to the pinpad or something that said you will be charged overdraft for this transaction, press ok to continue, there might not be a problem with high fees. Restaurants don't just start serving food and charging you for it before you even place your order.

@whydidnt: because banks can just raise their fees at any time, and it can be a huge hassle to move your accounts from one bank to another. Banks are very regulated already, and people have to have faith in the banking system for it to work at all. It's hard to trust a bank when they rearrange the order you bought things in order to squeeze an extra $100 out of you.

@I am Mrs. Nerdtastic.: I really like the tiered penalty system. That seems to address most of the issues... responsible customers who make an occasional honest mistake suffer a gentle reminder; careless customers or those who are deliberately dishonest/trying to work the system have to pay through the nose.

Assuming that the bank coupled that with a "smallest to largest" processing system so that a single honest mistake didn't turn, overnight, into 10 or more overdrafts, I really think that would be a fair and responsible way to address the issue. Which bank do you use, if you don't mind me asking?

@voteccow: Banks were perfectly capable of making money for decades before they started this crap. You sound like you have a massive case of Stockholm syndrome. "Oh yes please gouge the crap out of me I deserve it so some CEO can buy a second house in Europe".

@voteccow: All businesses need to make money and I don't think anyone would argue with that. However, there's a difference between a "reasonable profit" and outright gouging with late fees just because they can.

Even worse are banks that purposely let an overdraft for $10 go through so they can charge the customer $45 in late fees. Enough is enough. We just gave billions of dollars to some of these clowns because they screwed up..the banks should be nailed with billions of dollars of late fees for their mistakes and bad judgement. I bet they might be a bit more sypathetic.

@frank64: Yes we should have and I did. But too many people are either spineless sheep or don't bother to pay attention to their finances because American Idol is on in 5 minutes.

Now the banks have consolidated to an extent they never should have been allowed to. They ate up all the smaller regional banks to the point you have far fewer options other than one of the big banks. The industry wanted this big monopoly on a mandatory function of society, great, now they get regulated.

@Skaperen: and to pay back their TARP money. The banks are not paying it back, we are.

@Shoelace: Charging people late fees on late fees should also be a federal offense.

@Zat: Unfortunately I can't move my mortgage. Because it has a guarantee on it, it must be serviced by the bank it is assigned to and they are both incompetent and a pack of asses.

@CaptZ: The problem is the banks are colluding on this and due to the big banks consolidating power into a handful of banks it is much harder to go elsewhere. When all the banks available charge the same insane and baseless fees then what?