The most profitable source of income for banks? Overdraft fees • Hacker News Board

Re: The most profitable source of income for banks? Overdraft fees

#21

Post by hippich » Tue, Aug 25, 2015, 1:03 AM UTC

I was bitten by overdraft fees few times, and after much complaining all fees were waived. BUT, every time I insisted on disable all kind of overdraft protections and simply dishonor ACH charge or paper check if balance is not enough. I've been told that even in that situation they will still charge NSF fees if check was authorized (and yes, recurring transactions are authorized.) They also offered to stop specific check. This will cost... same amount as NSF fee. Also, they can freeze account, it will cost... same amount as NSF fee, (and same amount to unfreeze)

This is local smallish CU...

Re: The most profitable source of income for banks? Overdraft fees

#22

Post by Cacti » Tue, Aug 25, 2015, 1:05 AM UTC

It's important to keep in mind that "overdraft fees" is a complete horseshit of a term. The banks could easily just deny the transaction... there's nothing in the universe that says you have allow your customers account to overdraft. As the link says, these really are not fees, but short-term high-interest loans, extended by the bank to the customer, with an intent little different from other high-interest short-term loan places.

These are LOANS, not FEES, at HIGH INTEREST rates, and they're aimed SPECIFICALLY at the poor, because they're the only ones without other options or recourse, and the least likely to fight the issue when it happens.

Re: The most profitable source of income for banks? Overdraft fees

#23

Post by fredkbloggs » Tue, Aug 25, 2015, 1:05 AM UTC

We could read 100 sob stories, or we could recognize that every single overdraft (other than errors and fraud, which do happen but are rare and these days invariably corrected) is voluntary. Yes, banks will make money any way that they can. Yes, they will happily take your last dollar, or even dollars you don't have and never will. No, they do not give one flying fucking rat's ass about you, your sister, or the homeless Vietnam War veteran who saves orphaned children on weekends and singlehandedly saved the world from nuclear annihilation last week. Twice. They don't care. Not one tiny bit. They're probably bastards.

So why in the name of all that's sane and holy would you give them money by falling into the traps that they set for you? You choose to write checks you don't know for sure are good. You choose to use your debit card instead of cash. You choose to keep poor records of your own accounts. These are choices that you make, or not, despite 13+ years of free public education that includes all the basic skills necessary to avoid this problem. And then you complain that the bankers are making too much money charging you a fee that you agreed to as a direct result of a transaction that you deliberately initiated against your account. You. Not the bankers.

If you can't or don't care to keep good records, you should use your checking account for only the bare minimum of transactions that you know for certain you can keep track of, only when you are absolutely sure you have enough in your account, and use cash for everything else. Basically, if it is at all possible to use cash for something, use cash. If you aren't sure of the terms on your account, get out your paperwork. If you lost it, call the bank and get them to send it to you again; they're required to do so. If you don't like the terms, find someone else; there are over 7,000 commercial banks in the United States.

There are thousands of pages of banking law and regulations devoted to making sure that you are aware of these fees, limiting them, obligating banks to refund or cancel them in certain situations, and on and on. It's your choice to pay them. It's your choice to hand those bastards a bunch of money for lending you literally a few bucks for a few days. Yours. Not theirs.

And they're not even grateful for it. You really oughtta cut those bastards off.

Re: The most profitable source of income for banks? Overdraft fees

#24

Post by artursapek » Tue, Aug 25, 2015, 1:05 AM UTC

nkozyra wrote: post #16

mkaziz wrote: post #14

Earlier quoted context omitted.

USAA - The United Services Automobile Association?

https://www.usaa.com/

I highly recommend USAA for checking/savings accounts. Been with them for 5 years or so.

Re: The most profitable source of income for banks? Overdraft fees

#25

Post by djloche » Tue, Aug 25, 2015, 1:06 AM UTC

staunch wrote: post #6

The pain overdraft fees cause poor people is truly hard to comprehend unless you've been there. It's incredibly evil. You've got $16 left for food and then then the Flickr account you forgot to cancel gets charged to your account, putting your balance at -$9. Now you have to pay $35/day until you get enough money to cover the overdraft fees. You end up paying $100+ for a $9 forced loan. The bank could have just decli…

I wish USAA would open their net a little bit to extended families. My brother is a doctor in the US Navy, but that supposedly wasn't 'close' enough of a family relation for me to qualify to do business with them.

Re: The most profitable source of income for banks? Overdraft fees

#26

Post by MereInterest » Tue, Aug 25, 2015, 1:06 AM UTC

Cacti wrote: post #22

It's important to keep in mind that "overdraft fees" is a complete horseshit of a term. The banks could easily just deny the transaction... there's nothing in the universe that says you have allow your customers account to overdraft. As the link says, these really are not fees, but short-term high-interest loans, extended by the bank to the customer, with an intent little different from other high-interest short-term…

In addition, the fact that they label it as "overdraft protection" is thoroughly ridiculous. Overdraft protection should protect me from overdrafts by denying a transaction. Instead, the worst effect of the overdraft, being charged an additional fee, is applied.

Re: The most profitable source of income for banks? Overdraft fees

#27

Post by cookingrobot » Tue, Aug 25, 2015, 1:09 AM UTC

Touche wrote: post #20

staunch wrote: post #6

The pain overdraft fees cause poor people is truly hard to comprehend unless you've been there. It's incredibly evil. You've got $16 left for food and then then the Flickr account you forgot to cancel gets charged to your account, putting your balance at -$9. Now you have to pay $35/day until you get enough money to cover the overdraft fees. You end up paying $100+ for a $9 forced loan. The bank could have just decli…

> They know exactly what they're doing. They're rich bankers robbing poor people. I can understand thinking that the "correct" thing to do here is to simply not allow a transaction when there aren't sufficient funds, but this language goes overboard. It's not robbing a person because they were unable to keep track of how much money they own and adjust accordingly.

It's a not consensual extraordinarily high interest loan. Robbery is a fine label to use for that.

Re: The most profitable source of income for banks? Overdraft fees

#28

Post by selectodude » Tue, Aug 25, 2015, 1:09 AM UTC

Touche wrote: post #15

stevewepay wrote: post #9

This is a quote from Michael Lewis' The Big Short, I'll never forget it: Obsessing over Household [Finance Corporation], he attended a lunch organized by a big Wall Street firm. The guest speaker was Herb Sandler, the CEO of a giant savings and loan called Golden West Financial Corporation. “Someone asked him if he believed in the free checking model,” recalls Eisman. “And he said, ‘Turn off your tape recorders.’ Eve…

> form of fines for overdrawing their checking accounts. Why in the world shouldn't you be fined for overdrawing your checking account? A checking account is not a loan, am I wrong in thinking this quote is B.S.?

The charge should be declined, no different than a credit card. Allowing it to go through and then charging usurious fees is wrong.

Re: The most profitable source of income for banks? Overdraft fees

#29

Post by [deleted] » Tue, Aug 25, 2015, 1:09 AM UTC

Touche wrote: post #15

stevewepay wrote: post #9

This is a quote from Michael Lewis' The Big Short, I'll never forget it: Obsessing over Household [Finance Corporation], he attended a lunch organized by a big Wall Street firm. The guest speaker was Herb Sandler, the CEO of a giant savings and loan called Golden West Financial Corporation. “Someone asked him if he believed in the free checking model,” recalls Eisman. “And he said, ‘Turn off your tape recorders.’ Eve…

> form of fines for overdrawing their checking accounts. Why in the world shouldn't you be fined for overdrawing your checking account? A checking account is not a loan, am I wrong in thinking this quote is B.S.?

[deleted]

Re: The most profitable source of income for banks? Overdraft fees

#30

Post by fredkbloggs » Tue, Aug 25, 2015, 1:10 AM UTC

boling11 wrote: post #18

Bank overdraft and NSF fees are definitely odious. It's part of the reason why so many poor people have switched over to prepaid and are opting to pay the $5-$10 monthly fee for those accounts - it comes out to less for many people and at least it's predictable. These types of fees have been especially egregious in recent years, because the bigger banks have had their traditional revenue sources drastically capped/re…

> These types of fees have been especially egregious in recent years, because the bigger banks have had their traditional revenue sources drastically capped/reduced (interchange & interest spread).

Maybe the lesson is that over-regulation and financial repression aren't so good for the people. These guys are going to make money somehow. You can create a system that allows them to do so with minimal harm while providing valuable services or you can take away every stream of revenue except the evil things they haven't thought up yet. America is clearly opting for plan B, and it's working about as well as you'd expect.