If you perform an ATM or debit card transaction that results in your account being overdrafted, many banks will now simply authorize the transaction and slap you with an overdraft fee. A new bill, HR946, would “require banks to give consumers a chance to back out of transactions that might cause them to overdraw their checking accounts,” according to the Kansas City Star.
A study by the Center for Responsible Lending found that the hardest hit by overdraft fees are consumers between ages 18 and 24, and that banks use “abusive overdraft loans to collect nearly $1 billion per year in fees from young adults who earn relatively little as students or new members of the workforce.”
Bank officials have countered with some really amusing defenses:
- This is our way of saving a customer from the embarrassment of a declined transaction.
- Overdraft fees teach young people financial literacy.
- It’s up to the customer to keep track of this information.
Okay, we can’t really argue with that last one—but it would be nice if your bank helped you keep track of such data, and warned customers of exceptions instead of setting up a system to profit from them.