The most profitable source of income for banks? Overdraft fees
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Re: The most profitable source of income for banks? Overdraft fees
#2This is one of the financial barriers that severely impacts the ability of poor people to amass monetary wealth, but is invisible to the rich. Before they were overdraft fees, they were Non-Sufficient Funds fees for overdrafting, and these NSF fees still exist for those who can't even get the "overdraft loan".
> Banks originally offered clients this service as a courtesy.
Banks originally opted in at-risk customers. This was before payday loans became popular, and the market is one and the same. If you were short of funds this month, you'll probably be short next month too.
Source: personally being an at-risk customer who was opted in without asking.
Re: The most profitable source of income for banks? Overdraft fees
#3This is one of the financial barriers that severely impacts the ability of poor people to amass monetary wealth, but is invisible to the rich. Before they were overdraft fees, they were Non-Sufficient Funds fees for overdrafting, and these NSF fees still exist for those who can't even get the "overdraft loan". > Banks originally offered clients this service as a courtesy. Banks originally opted in at-risk customers.…
The most egregious example that has happened to me: I had a checking account with a hidden $5 fee if the balance went below $5000 in a given month. I made a big purchase, left the account with about $3 in it and scheduled a transfer from savings for the next day... you know how it played out: $5 fee on the low balance, $50 charge to "borrow" the $2 all taken from the transfer the next day. They call that a "service". ha.
Re: The most profitable source of income for banks? Overdraft fees
#4My father was dying and I'd moved home to help him out in his last days. He'd lasted longer than we thought, and so I was very low on money. But he wanted something from the store, and it was cheap, and I went to get it. It went through, but I got a $35 overdraft fee for something like $0.50 over. I was angry, and the woman at Wells Fargo chastised me for not checking my balance by phone before charging anything. Mind you, this was after I told my bank to just decline any charges that would put me over.
I left Wells Fargo that day and have never been back to them or any other big national bank.
Re: The most profitable source of income for banks? Overdraft fees
#5This is one of the financial barriers that severely impacts the ability of poor people to amass monetary wealth, but is invisible to the rich. Before they were overdraft fees, they were Non-Sufficient Funds fees for overdrafting, and these NSF fees still exist for those who can't even get the "overdraft loan". > Banks originally offered clients this service as a courtesy. Banks originally opted in at-risk customers.…
A different angle. But probably for the same reason. You kinda wonder why these poor communities don't have community-owned businesses. Crowdfunded works so well, why not in ghettos? It doesn't help when most people don't have any spending money to contribute because they are drained dry by the banks...
Re: The most profitable source of income for banks? Overdraft fees
#6The 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 declined the charge and let you deal with it, but even though you have overdraft "protection" turned off, they've decided to classify this transaction as an on-going contractual relationship, letting the charge through so as not to "inconvenience" you. Bankers are inventive at skirting the law.
They know exactly what they're doing. They're rich bankers robbing poor people.
I won't be satisified until Bank of America, Wells Fargo, and all these other evil American banks pay back every single dime to their victims.
Until then, no one should even consider helping these evil banks when there are good ones available. USAA is great.
Re: The most profitable source of income for banks? Overdraft fees
#7This is one of the financial barriers that severely impacts the ability of poor people to amass monetary wealth, but is invisible to the rich. Before they were overdraft fees, they were Non-Sufficient Funds fees for overdrafting, and these NSF fees still exist for those who can't even get the "overdraft loan". > Banks originally offered clients this service as a courtesy. Banks originally opted in at-risk customers.…
Not only opted in without permission, but receiving derisive reactions when requesting to opt out. "You wouldn't want to be embarrassed by having your payment refused would you?" Sure, that's fine, because there's invariably some issue with the store network, or the electronic payment processor that randomly refuses payment anyway. What's the difference?
"Are you sure you don't want this 'protection'?" I'm protecting myself from your fee. That's protection enough.
Furthermore, I worked in IT at a bank for awhile and witnessed many wealthy customers coming through to cash large checks for which they hadn't the funds - a head teller would sign off on the cash, no fees charged, and the customer leaves with the money.
Re: The most profitable source of income for banks? Overdraft fees
#8Here's a good breakdown of checking account profitability:
http://www.bankdirector.com/index.php/issues/retail/the-prof...
Re: The most profitable source of income for banks? Overdraft fees
#9This 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.’ Everyone turned off their tape recorders. And he explained that they avoided free checking because it was really a tax on poor people — in the form of fines for overdrawing their checking accounts. And that banks that used it were really just banking on being able to rip off poor people even more than they could if they charged them for their checks.”
Eisman asked, “Are any regulators interested in this?”
“No,” said Sandler.
“That’s when I decided the system was really, ‘Fuck the poor.’”
Re: The most profitable source of income for banks? Overdraft fees
#10The 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…
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