Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Debit cards are hidden financial infrastructure

bam.kalzumeus.com

Post reply on HN
Print view View original

281–290 of 398 posts

Re: Debit cards are hidden financial infrastructure

#281

Post by rootusrootus »

jlmorton wrote: post #178
8ytecoder wrote: post #157

Earlier quoted context omitted.

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 r…

The latest thing I've noticed is that if you attempt to debit, say, $100 from an account that has only $95, it will successfully debit $95 and then the POS equipment will show that you still need to find some other way to pay the remaining balance. Used to be in this situation it would just be rejected outright.

It's more handy for gas pumps, but less transparent. It stops before your tank is completely filled, but doesn't say why. You can hear the difference if you are standing there while it fills, of course, but other than that you may be confused why it slowed down and stopped exactly at a certain amount and won't go any farther.

Re: Debit cards are hidden financial infrastructure

#282

Post by chondl »

whimsicalism wrote: post #67

> the industry generally estimates approximately $350 a year in costs to maintain a checking account, of which approximately $120 is direct marginal cost Does this not seem ridiculously high to anyone else?

This seems most likely to be an error in the document: "median checking account balances at account creation are only around $3,000 ... At a 4% net interest margin, this account would only contribute about $120 in margin during its first year...." 4% of $3,000 is $12. I suspect both $350 and $120 are 10x too big. Alternatively the average checking account is 10x the median which seems unlikely.

Re: Debit cards are hidden financial infrastructure

#283

Post by Ozzie_osman »

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?

Yea. For people who aren't familiar with this, the bank will reorder your transactions and batch them to do the biggest one first. Then you get charged an overdraft fee per transaction after that. If they did the small ones first, you may not go into overdraft until the last big one... So you'd pay one fee. Do the largest first, then each small one causes a fee.

Highway robbery.

Re: Debit cards are hidden financial infrastructure

#284

Post by rootusrootus »

beebeepka wrote: post #254
ryandrake wrote: post #94

Earlier quoted context omitted.

Yes, that's exactly what they would do. Even better (for the bank's profits) is if you had lots of other smaller transactions that day too. They would re-order everything from largest-to-smallest, so it's: 1. have $10 in your checking 2. pay $9 for steak 3. buy sausage for $5 4. charge overdraft 5. buy milk for $3 6. charge another overdraft 7. pay $2 for parking 8. charge another overdraft 9. buy a pack of gum for $…

Dear gawd. I've never heard of this shit before and hope it's not a thing anywhere else. Amazing it's all legal. That's the very definition of fraud

I may be wrong, but I think this is now illegal in the US. I haven't heard of it in a while, at least. But it's also been some time since I left little enough in my account that it could happen to me, or banked at a shitty bank that would even do it to begin with.

Re: Debit cards are hidden financial infrastructure

#285

Post by LMYahooTFY »

clippablematt wrote: post #211
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…

Had five years or so of that awful cycle. It’s interesting when you meet people who haven’t experienced living under the brutality of the banking system. Overdraft, payday loans, high interest credit. They think it’s all fine. Fear of overdraft fees is a real class divider. One thing I really remember is being absolutely broke, and a guy from the bank calling to see if I’d be interested in taking on a credit card “we…

I'm curious about your journey, what do you do in Crypto? Have you written about it anywhere?

Re: Debit cards are hidden financial infrastructure

#286

Post by JoBrad »

cameronh90 wrote: post #231
joecool1029 wrote: post #141

Earlier quoted context omitted.

I seem to recall there being service levels at banks in Canada and maximum numbers of transactions per month until one gets hit with per-transaction fees. I was told explicitly when I opened my TD Canada Trust account there that it was imperative that I both keep money in the accounts and use them occasionally or dormancy fees would accrue (and if there was no money left, they'd then slam it with overdraft fees). The…

UK banks are pretty heavily regulated. For example, the overdraft fee spiral has been banned and in many cases banks were required to pay compensation. Yet we have quite a lot of banks to pick from - around 60 if you include building societies (more if you include private, niche and specialist banks). We also have a fair few new and digital challenger banks like Monzo, Starling, Atom, Revolut and arguably Metro Bank.…

I could be mistaken about this, but I thought it had something to do with the UK’s relationship with the EU (and perhaps the US, as well?) that made the UK particularly attractive to financial industry.

Re: Debit cards are hidden financial infrastructure

#287

Post by rootusrootus »

MereInterest wrote: post #223
bagels wrote: post #175

Earlier quoted context omitted.

You got charged and convicted of a crime?

Not the OP, but having it on his record likely refers to his credit record, maintained by private agencies, not a conviction record.

Probably ChexSystems. Kinda like a credit report, governed by the same laws, but distinct from the big three bureaus everyone is familiar with. All the banks use them. And anything negative on that report will prevent you from opening up an account somewhere else until you get it removed.

Re: Debit cards are hidden financial infrastructure

#288

Post by JoBrad »

jlmorton wrote: post #178
8ytecoder wrote: post #157

Earlier quoted context omitted.

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 r…

Consumers don’t use ACH for very much. Businesses utilize ACH a lot, because despite the additional time lag, it’s free.

Re: Debit cards are hidden financial infrastructure

#290

Post by kybernetyk »

Foobar8568 wrote: post #165
steveBK123 wrote: post #99

Earlier quoted context omitted.

The transaction re-ordering to maximize the amount of overdraft events should have put execs in prison. Out of all the obviously corrupt, mal-intent, direct consumer harming practices this was quite near the top.

In a French bank, I have credit transactions first then debit ones, in a Swiss bank, the contrary, I was shocked, especially that day, I did check my bank account to verify if I could proceed with a wire transfer, the following day, it shown a temporary minus amount but I didn't get an overdraft. So yes, fuck banks.

In capitalist West bank robs you.
Post reply on HN