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Debit cards are hidden financial infrastructure

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Re: Debit cards are hidden financial infrastructure

#171

Post by xdennis »

chrisseaton wrote: post #29
tasogare wrote: post #23

Earlier quoted context omitted.

What? That seems totally backwards. Don't spend money you don't have, which mean using debit. Credit is useful for the single use case of buying a house.

Why spend your own money when someone is willing to loan you money for free, will give you some of your money back, and will also protect you against consumer issues? You’re leaving money and protection on the table by not using them.

Because when you spend someone else's money you still have to pay it back... sometimes more.

A bank is a lot smarter than me. It wouldn't want me to use credit cards if it were in my advantage.

Re: Debit cards are hidden financial infrastructure

#172

Post by em500 »

chrisseaton wrote: post #7
wmf wrote: post #5

Besides the gig economy I heard that a lot of retail businesses like Walmart now pay employees by debit card instead of check. So instead of a check cashing place taking 3% of people's paychecks some bank is taking 1.x% in interchange, and if the bank happens to be owned by Walmart well who would notice.

> a check cashing place taking 3% of people's paychecks You have to pay to deposit your pay in the US?

The more shocking tidbit is that lots of Americans still get a literal paper paycheck.

Re: Debit cards are hidden financial infrastructure

#173

Post by chrisseaton »

xdennis wrote: post #171
chrisseaton wrote: post #29

Earlier quoted context omitted.

Why spend your own money when someone is willing to loan you money for free, will give you some of your money back, and will also protect you against consumer issues? You’re leaving money and protection on the table by not using them.

Because when you spend someone else's money you still have to pay it back... sometimes more. A bank is a lot smarter than me. It wouldn't want me to use credit cards if it were in my advantage.

You have to pay it back… one month later. You can keep your own money safe and invested until then. And you don’t have to pay any more if you pay it on time.

The bank wants you to use credit because they get paid by the merchant every time you do.

Re: Debit cards are hidden financial infrastructure

#174

Post by loh »

mherdeg wrote: post #56
numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

It's not just overdraft fees right? It's overdraft fees plus transaction reordering which makes the magic happen. I'm still kind of mesmerized on this one, it felt like regulatory action almost happened, the most lucrative of the overdraft practices got limited circa 2009/2010, and then banks voluntarily toned it down and the regulators mostly looked the other way on things like reordering?

I remember this happening to me when I was a broke college student over a decade ago. I had to pay some bills and buy some things, and I expected a single overdraft fee, as I knew my exact account balance and the order of the purchases. I remember being hit with 3 (maybe 4) overdraft fees and immediately called my bank for an explanation. They gave me some bs like, "We reorder transactions to make sure your large ones go through first since they're probably more important." It was obvious at the time what they were really doing and why, which led me to eventually close my account with them and go with a local credit union.

Re: Debit cards are hidden financial infrastructure

#175

Post by bagels »

eyelidlessness wrote: post #135
eyelidlessness wrote: post #97

Earlier quoted context omitted.

My last bank (US Bank, don’t bank with them) did this in a way where in one day where I had only one transaction which could overdraft they charged 6 overdrafts even though my net would have been positive. If I wasn’t (at the time) skilled at ~~kicking and screaming~~ advocating for myself I would have been out $180 plus whatever 30 cents they had calculated I went negative. Which (again at the time) was the differen…

Oh since I’m naming names. The bank before that, Wells Fargo, honored a check I wrote > 2 years earlier. Sure, I wrote it and I was good for it at the time. I forgot about it. Maybe I could’ve left that money in limbo but at a certain point I assumed my moderately wealthy aunt wasn’t gonna cash it. Well it doesn’t matter what I assumed, the law said the check was no longer valid. When Wells Fargo honored it and overd…

You got charged and convicted of a crime?

Re: Debit cards are hidden financial infrastructure

#176

Post by c22 »

eyelidlessness wrote: post #97
mherdeg wrote: post #56

Earlier quoted context omitted.

It's not just overdraft fees right? It's overdraft fees plus transaction reordering which makes the magic happen. I'm still kind of mesmerized on this one, it felt like regulatory action almost happened, the most lucrative of the overdraft practices got limited circa 2009/2010, and then banks voluntarily toned it down and the regulators mostly looked the other way on things like reordering?

My last bank (US Bank, don’t bank with them) did this in a way where in one day where I had only one transaction which could overdraft they charged 6 overdrafts even though my net would have been positive. If I wasn’t (at the time) skilled at ~~kicking and screaming~~ advocating for myself I would have been out $180 plus whatever 30 cents they had calculated I went negative. Which (again at the time) was the differen…

Oh man, I banked with US Bank back in 2003/2004. One day I overdrafted my checking account by about $5. "Overdraft protection" kicked in and they automatically transferred money from my savings account, but not before charging a $25 fee that caused... another overdraft. This repeated automatically over a dozen times in one day to the tune of around $300. I noticed what was going on that evening and manually transferred some extra into checking to stop the cycle.

The next morning I went in to sort it out and was told I needed to travel an hour away to the branch I had originally set up my account at. Upon arriving at my "home" branch I was told the manager was on vacation and no one else could help, but she would call me as soon as she got back. Two weeks later, having received no call, I went back in and saw the manager sitting at her desk. I closed all my accounts on the spot and never looked back.

Re: Debit cards are hidden financial infrastructure

#177

Post by jjav »

chrisseaton wrote: post #54
reaperducer wrote: post #38

Earlier quoted context omitted.

Are there American banks that don't cover debit transactions with the same guarantees as credit card transactions? I've had two debit cards from two different large banks skimmed in the last five years, and both times the banks took care of it instantly. I think the whole "no coverage if you use debit" notion is many years out of date.

With a debit card you’re relying on the bank’s good will. With a credit card it’s the law. Also with credit you can dispute it before you pay it. With debit you’re trying to fix it up after your paid it.

> With a debit card you’re relying on the bank’s good will. With a credit card it’s the law.

Can't emphasize this enough!

It is true that many banks do offer fraud protections on their debit cards. But those are just a choice by the bank. They can at any moment stop or withdraw those protections and then you're out of luck.

With a credit card, the protections are written into regulation, so every bank must follow them and can't change the terms.

Re: Debit cards are hidden financial infrastructure

#178

Post by jlmorton »

8ytecoder wrote: post #157
NikolaNovak wrote: post #118

Earlier quoted context omitted.

I'm going to re learn the lyrics to Oh Canada and sing them joyously and thankfully... Our banking system gets a lot of ire but dear Gawd.

It a uniquely American stupidity that somehow everyone just lives with. The concept of overdraft doesn’t even exist in normal consumer accounts anywhere else in the world. The first thing I do when I open an account here is to disable overdraft - but then you have to pay return cheque charges by whoever was trying to charge your account.

The history is that people used to write paper checks, and merchants would charge a bounced check fee. Overdraft _protection_ was actually a banking feature which would save you from the cost and embarrassment of a bounced check.

There is very nearly zero usefulness to overdraft protection in a real-time authorization world. Nobody charges a fee for a rejected debit authorization.

I suppose merchants might charge a return check fee for a failed ACH payment, but nobody uses ACH payments for anything routine in the US.

Re: Debit cards are hidden financial infrastructure

#179

Post by bagels »

R0b0t1 wrote: post #166
numair wrote: post #43

The beginning of this article is a fairy tale that ignores what used to be one of the biggest drivers of revenue for banks: overdraft fees. Maybe the HN crowd has never been in a situation where they were auto-billed into a negative balance, which then caused an overdraft fee that then further drove their balance into negative territory, but this was a weekly/monthly fiasco for millions of Americans. I was once in a…

If your colleague had thrown him out of the window the world would be a better place. Think on that.

Not really, the bank would just pay someone else to say and do awful things.

Re: Debit cards are hidden financial infrastructure

#180

Post by freeone3000 »

xdennis wrote: post #167
smabie wrote: post #80

Earlier quoted context omitted.

Why would you ever not want to put something on a cc? It's quite literally free money (rewards/points + you can delay payments for a month and pay no interest)

Why spend money you don't have? If you do have money, why do you need to borrow money you already have?

Because I get 2-5% of it back if I put it on a credit card and pay it off and the end of the month.
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