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

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

#141

Post by morgante » Tue, Aug 25, 2015, 2:30 AM UTC

mrmirz wrote: post #61

onion2k wrote: post #11

I'm not saying this isn't true, but the post is on the blog of a short term loans company who have a vested interest in people believing a short term loan would be preferable to an overdraft fee, and there's no cited report or study that suggests banks make most of their money from fees. A couple of articles that make me wonder; http://www.businessinsider.com/chart-of-the-day-how-a-bank-m... http://www.wsj.com/articl…

"In fact, roughly half of respondents to the ICBA survey say that overdraft fees constitute their most profitable non-depository and non-lending product, despite regulatory changes that have crimped their income potential." http://independentbanker.org/2014/01/finding-more-fee-income...

So basically the article is completely wrong when it says:

> The most profitable source of income for banks is not mortgages, credit card fees or mutual funds, but the fees they charge clients for these short-term loans.

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

#142

Post by Touche » Tue, Aug 25, 2015, 2:38 AM UTC

themartorana wrote: post #113

Touche wrote: post #36

Earlier quoted context omitted.

Fine, say it's wrong. Don't say it's a "tax". You have no choice with regard to taxes; you have a choice to not overdraw your account.

What is the purpose of being so overly pedantic? It's all over this thread. "A rose by any other name would smell as sweet..."

Because the distinction between being a victim and being a willful participant in a malevolent scheme is an important one. Recognizing that makes it easier to diagnose why things aren't as ideal as we wish they were.

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

#143

Post by a3n » Tue, Aug 25, 2015, 2:41 AM UTC

tsotha wrote: post #101

nulltype wrote: post #86

Earlier quoted context omitted.

I guess the counter question is why is USAA only available to military members?

USAA isn't a bank, it's a credit union. It's "field of membership" is uniformed military and their families.

Actually, USAA is a bank. At least the bank part of them is a bank. They're also an insurance company, an investment company, and a few other things. But the banking part is a bank.

From their site's front page: USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. https://www.usaa.com

Notice the FDIC. Credit unions are not insured via FDIC, they use NCUA. http://www.gobankingrates.com/banking/fdic-versus-ncua-insur...

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

#144

Post by Touche » Tue, Aug 25, 2015, 2:41 AM UTC

tdfx wrote: post #114

Touche wrote: post #43

Earlier quoted context omitted.

> No. Emphatically, no. It IS robbery. Have you ever been a poor person? Yes, I overdrew my account when I was in college and had $50 to my name. It was my mistake, I made a purchase unsure of how much money I had. I also used to work for a bank that gave out RALs so I'm perfectly aware of the unethical behavior that happens in banking. So call it unethical, call it what it is. Using inaccurate alarmist language does…

As a college student, I am assuming that you didn't have much money, but also likely had rather limited expenses. To the family with children that has $50 to their name, a rent payment, childcare expenses, etc, most of which they can barely afford already, an unexpected overdraft can be the trigger that sends them off a financial cliff. Poor people often make very bad financial decisions. But so do rich and middle cl…

All true, but you can't regulate away bad decisions. By attempting to do so you just make the next scheme even more disgusting.

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

#145

Post by rhino369 » Tue, Aug 25, 2015, 2:44 AM UTC

silveira wrote: post #77

mikekchar wrote: post #41

Earlier quoted context omitted.

There are a couple of times in my life when I was quite poor (for someone living in a G8 country...) The biggest thing I learned was to use cash. Cash is awesome because you can see how much you have and you can't spend more than you have. Even now that I am relatively well off, I have my habitual routine of getting cash at the beginning of the week and spending only that for the week. In fact, I make sure that there…

Civil forfeiture laws in the US. I don't feel safe carrying a reasonable amount of cash. Here the police can just rob me, and now I'm guilty until proven innocent. In DC it costs up to $2500 for the right to challenge a police seizure in court, it's complex, expensive and it can take years.

You are way more likely to get stuck up by a mugger (aka the real cash risk). But 2500 is insane. Is it really that much? Or does that include attorneys fees.

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

#146

Post by geofft » Tue, Aug 25, 2015, 2:48 AM UTC

Touche wrote: post #91

geofft wrote: post #75

Earlier quoted context omitted.

What is the purpose of a fine? Before we discuss further why one shouldn't be fined, can we make sure we agree on why one should ? Off the top of my head, I see "dissuading behavior that negatively impacts the bank", and that doesn't seem to justify a fine in this case, but maybe you're thinking of a rationale for a fine that I and maybe others are not thinking of.

> Off the top of my head, I see "dissuading behavior that negatively impacts the bank", and that doesn't seem to justify a fine in this case, but maybe you're thinking of a rationale for a fine that I and maybe others are not thinking of. Great! Someone that wants to participate in reason and not just boisterous proclamations. I'm down. So yeah, I agree with your definition and it applies in this case because the ban…

So a couple of things:

1. Why can't the bank refuse to process the charge?

2. This seems to be failing, in practice, at dissuading people and making them pay attention to keep a positive balance. At least according to a couple of comments here, there are people who are repeatedly hit by overdraft fees. Is there something better that can be done do solve the actual problem, which is banks having to come up with money to cover these tiny loans?

3. Is there a more proactive way to solve this, such as notifying people (phone, text, push notification, whatever) that their balance is low and they have a recurring charge coming up? Wouldn't that be better for the bank, so that the problem wouldn't happen in the first place?

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

#147

Post by vonklaus » Tue, Aug 25, 2015, 2:48 AM UTC

Kinnard wrote: post #33

This is all the more frustrating—no, enraging, when you learn how banks create money.

Underrated comment. I was just listening to a bitcoin podcast with the Bank to the Future author discussing this. Bit one sided, but really interesting essentially he posits that capitalism is somewhat problematic but still a great way to organize actors in a market, however the ability for banks to create money and the false assumption that they are intermediaries has lead to the problems we're in now.

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

#148

Post by jrockway » Tue, Aug 25, 2015, 2:49 AM UTC

fredkbloggs wrote: post #99

cookingrobot wrote: post #54

Earlier quoted context omitted.

They're not asking for a loan, they're asking to withdraw their own money that they put in the bank. The bank deliberately chooses to turn this into a loan if they accidentally ask for more than is currently there.

Let's talk about the word "accidentally". Suppose I drive to a bar, have three beers, and drive home. I don't bother to check my BAC; I just assume I'm below the legal limit and can drive safely. On the way, I accidentally run over a budding young Progressivist on the street, who then dies. When the sheriff shows up, he finds that my BAC is 0.09 -- just over the limit! Surely, you will agree that any penalty I am ass…

Did this hypothetical event take place in New York City? If so, the NYPD would probably throw a parade in your honor.

Even if you were a driving a commercial truck and ran over a kid walking to school while driving without a license, they still wouldn't press charges.

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

#149

Post by fredkbloggs » Tue, Aug 25, 2015, 2:51 AM UTC

Karunamon wrote: post #63

fredkbloggs wrote: post #23

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 home…

And the best part is, you're being downvoted for this.. I dunno, apparently a lot of HN thinks that it's impossible to believe that banks are generally run by bastards while simultaneously believing that 99% of these instances are completely voluntary and completely avoidable? If you keep track of what you're spending your money on, it's not a problem you're gonna have to ever deal with - and I say this as someone th…

Well, I expected to be downvoted. This is one of the most heavily Progressivist boards on the entire Internet, so it goes without saying that this view is unpopular. And downvoting is much easier (and faster, and consequence-free) than arguing the facts, especially when they're not on your side. If I weren't willing to accept this, I wouldn't post here. There's a lesson in there somewhere.

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

#150

Post by fredkbloggs » Tue, Aug 25, 2015, 2:53 AM UTC

jrockway wrote: post #148

fredkbloggs wrote: post #99

Earlier quoted context omitted.

Let's talk about the word "accidentally". Suppose I drive to a bar, have three beers, and drive home. I don't bother to check my BAC; I just assume I'm below the legal limit and can drive safely. On the way, I accidentally run over a budding young Progressivist on the street, who then dies. When the sheriff shows up, he finds that my BAC is 0.09 -- just over the limit! Surely, you will agree that any penalty I am ass…

Did this hypothetical event take place in New York City? If so, the NYPD would probably throw a parade in your honor. Even if you were a driving a commercial truck and ran over a kid walking to school while driving without a license, they still wouldn't press charges.

Since this thread isn't about police misconduct, let's assume not. If you insist, feel free to assume it was an older straight white male rumored to vote Republican bouncing around under my wheels.