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

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

#211

Post by JoeAltmaier » Tue, Aug 25, 2015, 4:08 PM UTC

jonas21 wrote: post #210

akshatpradhan wrote: post #194

Earlier quoted context omitted.

>You are way more likely to get stuck up by a mugger (aka the real cash risk). Can you provide citations? Thanks!

There were an estimated 345,031 robberies in the US in 2013, of which 42.5%, or about 146,000, were street/highway robberies (muggings) [1]. For the 13 years between Sept. 2001 and Sept. 2014, the Washington Post analyzed records from the DOJ and found 61,998 civil forfeiture cases "that were not made at businesses and that occurred without warrants or indictments". This is around 4,770 per year. [2] Neither of these…

Wow, but I don't expect my public servants to stick me up. Something terribly twisted about that.

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

#212

Post by nandemo » Tue, Aug 25, 2015, 4:14 PM UTC

maehwasu wrote: post #183

nandemo wrote: post #177

Earlier quoted context omitted.

*> You've got $16 left for food and then then the Flickr account you forgot to cancel gets charged to your account, I don't want to be rude but I wonder what set of circumstances leads a poor person to subscribe to a relatively superfluous service (unless you're a pro photographer?) in the first place.

Could happen from anything. I've also been poor, and one thing that sent me over the edge was a check that someone waited months to cash. Thought I had $200 in my account, and made a payment with debit card, only to go under $0. What's worse, I wasn't notified, and made a couple more charges, all at exorbitant rates, until I realized what had happen. As always, it's best to interpret others' comments in the most gene…

> As always, it's best to interpret others' comments in the most generous way possible, rather than jumping to the conclusion that the poor person must have been spending too much money to pull himself up by his bootstraps.

Honestly, I didn't jump to any conclusions -- perhaps you're not interpreting my question in the most generous way?

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

#213

Post by DanBC » Tue, Aug 25, 2015, 4:17 PM UTC

dkuntz2 wrote: post #206

gizmo686 wrote: post #68

Earlier quoted context omitted.

Being legal tender means that something must be accepted as payment for a debt; it does not mean that it must be accepted as payment when no debt exists. For example, if you go to a restaurant that serves you before giving you your check then they are required to accept cash. However, they are allowed (possibly depending on jurisdiction) to insist on being payed by card prior to serving you.

There's very little incentive to accept card only. Cash, unlike credit or debit cards, doesn't carry an interchange fee, which means the full amount is going to the business, instead of losing some money to interchange.

UK Banks charge fees for handling cash.

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

#214

Post by jonas21 » Tue, Aug 25, 2015, 4:27 PM UTC

JoeAltmaier wrote: post #211

jonas21 wrote: post #210

Earlier quoted context omitted.

There were an estimated 345,031 robberies in the US in 2013, of which 42.5%, or about 146,000, were street/highway robberies (muggings) [1]. For the 13 years between Sept. 2001 and Sept. 2014, the Washington Post analyzed records from the DOJ and found 61,998 civil forfeiture cases "that were not made at businesses and that occurred without warrants or indictments". This is around 4,770 per year. [2] Neither of these…

Wow, but I don't expect my public servants to stick me up. Something terribly twisted about that.

Yeah, and I don't mean to defend civil forfeiture at all. It's a very troubling practice. But it is interesting to see how far off we can be at evaluating the risk of various things happening.

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

#215

Post by danharaj » Tue, Aug 25, 2015, 4:49 PM UTC

Karunamon wrote: post #130

danharaj wrote: post #126

Earlier quoted context omitted.

Again, this sort of reasoning allows every institution to open the doors to maximize the chance that vulnerable people fail in order to capitalize on it. There are many, many , many more traps in the world than overdraft fees for vulnerable people to account for. Governments, banks, employers, etc. are all hostile towards people. Every detail you have to track in order to not get fucked is a liability The silence on…

A detail such as "don't spend money you don't have"? Violating that principle will get you into trouble in ways that go far beyond checking accounts. Are gun manufacturers to blame as some part of power structure when you point it at your foot and pull the trigger? If not, why?

One would think a bank account were an instrument for storing and retrieving one's own money. Banks opted in customers to a system that would allow them to extract fees from people who work with low account balances. They exist.

Furthermore, if you look around this post's comments you'll notice that banks do far more than just charge for overdrafting. They specifically optimize for extracting such fees and behave in an adversarial way. It is often difficult to know what balance one actually has unless one does all their accounting by hand. This is a ridiculous cognitive burden that people with ample account balances do not have to work with. Every institution acts adversarially in this way, because institutions operate to maximize their power as much as they can.

It is not ridiculous to think that human institutions should be structured to serve people, not exploit them.

> Are gun manufacturers to blame as some part of power structure when you point it at your foot and pull the trigger? If not, why?

This is a stupid analogy. A better analogy would be, say, if you tried to withdraw money from your bank account, and if you overdraw, instead of rejecting the transaction, the ATM shoots you in the face.

It doesn't even fucking matter. The point is that some humans with a lot of power optimize the extraction of resources from lots of humans with very little power. You think that's ok and that a society structured around humans being hostile and exploitive towards each other is a good thing, and I think that's objectionable.

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

#216

Post by OrwellianChild » Tue, Aug 25, 2015, 5:36 PM UTC

yummyfajitas wrote: post #167

Bud wrote: post #34

Earlier quoted context omitted.

No. Emphatically, no. It IS robbery. Have you ever been a poor person? Have you ever been overwhelmed with depression and the panic of a lost job, a few dozen bills you probably can't pay, the shame of asking friends and relatives for help, and in so doing, risking your relationships with those people and your own self-esteem? What you're missing here is that poor people KNOW that they are poor and right on the edge.…

Have you ever been a poor person? This is a fallacy. If you were to claim AGW occurs or that outer space is a vacuum, it would be a fallacy for me to say "have you ever been planet-sized body warming due to excess CO2?" Of course not, but one can still reason about such things. If you are claiming that the poor are incapable of taking responsibility for their choices, recognize that there is a term for this: incompet…

@yummyfajitas - I often appreciate the clear thinking you can bring to a discussion, but I just as often see you reduce human beings to logic machines in ways that are unfair to both them and your intellect...

There is a large and growing body of research around the limitations and capabilities of human decision making that shows just how/when these gaps appear. At a very basic level, poor (and otherwise distracted/overwhelmed) people suffer from decision fatigue [1]. There is much more going on, however, and I'm sure you'd find the studies fascinating, given your penchant for data-driven analysis. I cannot recommend Daniel Kahneman's Thinking, Fast and Slow for starters...

[1] https://en.wikipedia.org/wiki/Decision_fatigue

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

#217

Post by dang » Tue, Aug 25, 2015, 5:51 PM UTC

fredkbloggs wrote: post #189

darkmighty wrote: post #174

Earlier quoted context omitted.

Going on that line of thought, consumer protection laws, agencies and regulations would be nonexistent. Hopefully not everyone thinks that way. Also, I never read about progressivism before. https://en.wikipedia.org/wiki/Progressivism Can you sincerely say you are not progressivist after reading the introduction?

By the original philosophical definition, I'd probably qualify, though my affinity for the ideas is marginal. I'm not really convinced that our "advances" have improved the human condition. A few have, many others have not, and on the whole I think our species is in worse shape than it was 300 years ago. I'd like to think that an increase in our empirical knowledge would lead to an improved human condition, but empir…

Please stop using HN to conduct ideological tirades. You've been crossing into personal attacks, taking discussions into flamewars, and behaving high-handedly. None of this is good conversation.

Everyone with an agenda thinks that they're enlightening the world with their rhetoric ("in the desperate hope that some young people will read this and understand") and imagines themselves surrounded by enemies ("this is one of the most heavily Progressivist boards on the entire Internet") while they of course are simply offering "facts". What's striking is how predictable this pattern is and how little it depends on the content. You could easily, and many do, have the opposite politics and behave the same way and make the same claims about other people. On HN this typically includes self-flattering interpretations of downvotes.

This is little different from preaching on a street corner, haranguing passers-by. When passers-by react badly, it's apparently irresistible to conclude that they're cretins. But really it's just that most of us don't like being preached at. I'm sure many of the people downvoting you agree with at least some of your views. But when you're trying to have an interesting conversation and ideologues show up with megaphones, it's a real bummer. And HN being a public forum, it's not like there's a quieter street corner we can all retreat to.

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

#218

Post by pyre » Tue, Aug 25, 2015, 6:42 PM UTC

Touche wrote: post #152

danharaj wrote: post #90

Earlier quoted context omitted.

They don't have to because most people know that powerful institutions tend to act in bad faith in order to extract as much gain as they can from the vulnerable.

Yes! We do know this. Which makes getting screwed a highly avoidable situation.

So when people act in bad faith it is "ok" so long as we mistrust them anyways?

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

#219

Post by bryanwbh » Wed, Aug 26, 2015, 1:48 AM UTC

This is not at all, correct.

The most profitable source of income for banks is non-interest bearing checking accounts. On an overnight basis, Fed Fund Rate is 0.25% and Overnight USD LIBOR is at 0.133%. However these checking accounts pay nothing to customers. So, whenever customers deposits any amount of money, banks easily earn at a minimum 13bps out of it.

That is free income for the bank.

Other lucrative source of income for banks are interest bearing checking account and savings account as they pay peanuts to customers compared to what they can lend out to the interbank market.

Disclaimer: I work for a bank in the treasury dept

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

#220

Post by Retra » Thu, Aug 27, 2015, 2:29 AM UTC

yummyfajitas wrote: post #182

Retra wrote: post #169

Earlier quoted context omitted.

My money is in my checking account. That's where it is. I can't use money from somewhere else. I could put it on a card, but then I still have to pay the card at the end of the month, don't I? In fact, I just recently over-drafted my rent. Do you know why? Because my phone company auto-charges to my account. All I had to do was forget what day this happened, and not coordinate the exact day that my landlord cashed th…

If your landlord's bounced check fee is larger than $35, you'd have been better off with overdraft protection. Incidentally, there is a great way to reduce this risk; manually pay your bills. I don't have any automatic charges larger than $10. You chose higher risk for higher convenience. It's a little silly to claim that the choice you made is not rationally justifiable - how do we know you were irrational then rath…

I pay rent on a storage garage and the owners have a policy: either use automatic payments or pay $15 extra per month.

That kind of thing is not my choice. It's lose-lose. And if I could afford a bigger place, or had the money to move that stuff, I wouldn't be renting storage.

Anyway, it would be far more risky to try to move out. And then, if I end up with a shitty roommate who steals from me, you'd probably tell me that this is my fault too. That I should have used my infinite time to make perfect decisions at every step.

You pay extra to be poor. Whether you choose it or not. It is not worthwhile for you to believe otherwise just because you have some ideological preference.