Why is your bank account leaking so much money ever year? Where does it all go? Checking account customers are bleeding funds to the tune of about $225 per year on average, the Consumer Financial Protection Bureau says in a new study. That means that despite regulations aimed at lessening the effects of overdraft fees and clear up the whole process. [More]
Unless you’ve been hiding under a bed for the last six years, you probably know that the banking industry isn’t exactly beloved by many American consumers. As a reaction to public sentiment (and threats of regulation), a number of banks have begun phasing in some more consumer-friendly practices, but a new study shows these changes are not industry-wide and that several banks are still years behind. [More]
The notion behind an overdraft fee — in which a bank customer is charged a penalty for overdrafting his account — is twofold: To incentivize consumers to pay attention to how much money is in their accounts, and to allow the bank to recoup any money it lost by covering the overage. But a new report claims that these fees have become such a profit center for banks that it’s now in their interest to push account-holders with low-balance bank accounts toward overdrafting. [More]
Making the case for new overdraft legislation is a pretty big bit of evidence that shows just how hard those fees hit our wallets: Last year consumers paid a whopping $32 billion in overdraft fees, a $400 million jump from 2011. This, despite regulations that seek to protect consumers from such hefty charges.
Bank overdraft fees can pile up rapidly, making it increasingly more difficult for a consumer to get back to zero, which is why Congresswoman Carolyn Maloney of New York recently introduced legislation aimed at limiting how much and how frequently banks can ding account holders for these fees. [More]
Court: Wells Fargo Misled Customers About Debit Card Transactions But Doesn’t Have To Pay Back $203 Million (Yet)
It was a good news/bad news day at the Ninth U.S. Circuit Court of Appeals yesterday, as the court set aside a $203 million judgement against Wells Fargo for the way it processed debit card transactions, but kept the door open to hope that consumers might see some of that money. [More]
Expensive and complicated overdraft fees are pretty high on, if not at the top of, many bank customers’ complaint lists. So it only makes sense that the newly formed Consumer Financial Protection Bureau has decided to look into whether or not these fees are a fair way to keep people from overdrafting, or just a profit center for banks.
As it paid out $410 million to settle a class-action suit over reordering transactions to maximize overdraft fees and backed down after initiating a $5 monthly fee for debit card users, Bank of America has done some soul-searching. The bank says it’s decided not to go ahead with a plan to let customers opt in to a $35 overdraft fee on debit purchases made with insufficient funds.
To settle a class-action suit over reordering transactions to maximize overdraft fees, Bank of America agreed to pay out $410 million months ago. A judge has now approved the settlement, and the bank has coughed up the money into an escrow account from which it will be distributed to customers who were part of the suit. Those who had a Bank of America debit card between January 2001 and May 24, 2011 will automatically receive a payment of at least 9 percent of the fees they paid.
What makes this Bank of America $410 million class action settlement special is that it’s over a basic consumer banking business practice. For years, banks have been processing your daily transactions in order from highest to lowest, rather than real-time. They say they’re doing us a favor so that if we have a check bounce, it’s the one for the babysitter and not the mortgage payment. But this class action suit claims that Bank of America did this to unjustly enrich itself. It’s one of over 60 lawsuits against various banks for similar practices, and it could reshape the entire industry.
Reader DFCL says that he asked TCF Bank to close his account back in April as it only had a $.05 balance. Now it’s June, his account is still open, and he’s in collections for $149 in fees. Some very exciting things happened between those two points, including him offering to donate $500 to charity if they waived his fees. They declined his offer.
One of the results of the regulatory overhaul was that banks couldn’t automatically enroll people in “overdraft protection.” This kicked off a mammoth effort by banks to try to convince customers it was in their best interest to sign up for a program that would let them get charged $35 for overdrafting a $1 candy bar rather than go through the pain and humiliating of having a card declined. But a new survey by the Center for Responsible Lending found that most of the people who did opt in either had a misconception about how the overdraft protection, or simply wanted the ceaseless onslaught of pitches from their bank about it to stop.
We recently wrote about the PIRG study showing how fewer than 40% of banks were willing to clearly disclose checking account fee schedules. Now a new report from the Pew Charitable Trust demonstrates just how far banks are willing to go to make it difficult for consumers to know what they are getting with their checking accounts.
Wachovia sent out an eblast trying to get people to sign back up for overdraft protection, and the fees that “service” entails.
If you’ve felt the burn of a $35 overdraft charge, just be thankful you’re not Chicago’s Heartland Cafe, which has had to shell out $118,000 in cascading overdraft charges.
Freddy was furious. $126 in overdraft fees? Even though his balance is sometimes down to the wire, he is careful to make sure he has enough funds in his account. Ah yes, but this doesn’t account for when they mess up.
Freddy watches his balances like a hawk, so he was surprised when TD Bank hit him for $126 in overdraft fees. Turns out the bar he had gone to had accidentally charged his debit card twice for one of his drinks, and though he was careful to stay within his low balance, it set the stage for a cascade of fees.