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The $36 soda: Overdrafting in America

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Re: The $36 soda: Overdrafting in America

#161

Post by maxerickson »

cosgroveb wrote: post #43
kstenerud wrote: post #28

Earlier quoted context omitted.

The fact that banks collected 38 BILLION from customers in overdraft fees would seem to suggest that people AREN'T choosing to change their habits, even on such a simple thing as this. Yes, by all means, make the banks stop gouging people like that (especially maximizing fee collection by ordering largest-to-smallest). But really, once you've suffered overdraft fees once, there's no excuse for suffering it again and…

I'd be interested to know the stats on how many people have had overdraft fees and never let it happen again (or seldom) vs. those who get them routinely. It's happened to me. Once. Never again.

FDIC studied it in 2006:

http://www.fdic.gov/bank/analytical/overdraft/

They state that the sampling wasn't random and shouldn't be extrapolated, but for the banks with automated overdraft protection that they studied closely, 4.9% of customers had 20 or more overdrafts per year and paid 68% of all non sufficient funds fees collected by the banks. An additional 4% of customers had between 10 and 19 overdrafts and paid about 16% of the fees (so as a group, people with more than 10 overdrafts a year paid 84% of overdraft fees).

The people with 20 or more overdrafts averaged about $1,500 a year in overdraft fees.

Re: The $36 soda: Overdrafting in America

#162

Post by tibbon »

dkokelley wrote: post #55
ww520 wrote: post #53

Earlier quoted context omitted.

Is there an easy way to get into USAA for non-military people?

USAA banking is available to everyone. Some nicer services (deposit by phone, insurance) are for service members only. For what it's worth, my brother (Air Force) sold me on USAA after he signed up with them. I worked at Wells Fargo at the time, so I had the best accounts. I'm happy I made the switch. Also, their web interface and iOS apps are excellent. By far the best I've seen.

Wait, really? I was under the notion that the banking was service only. I'm in!

Re: The $36 soda: Overdrafting in America

#163

Post by dodedo »

randallsquared wrote: post #143
caw wrote: post #130

Earlier quoted context omitted.

I wouldn't say that's completely unheard of when I went to college. If he's watching it because he doesn't trust you to manage your own money that's one thing, but there are other reasons for being able to manage an account. For instance, if the father wasn't a custodial on the account he can't deposit money in the event he needs it. My parents would have to mail me a check or pay a $25 bank transfer fee because they…

For instance, if the father wasn't a custodial on the account he can't deposit money in the event he needs it. When did that start? I've deposited money many times into other people's accounts without problems; you don't even have to show ID -- just fill out a deposit slip with their account number and hand over cash.

In person? Not sure about that, but I know that recently I tried to set up payments between BofA and WellsFargo and I wasn't able to do automatic or online transfers of amounts over $1000.

When I was younger I had a joint custodial account with my father, for a similar purpose, though it wasn't my primary checking account. It's much, much easier to move money between two accounts you control.

Re: The $36 soda: Overdrafting in America

#164

Post by jm4 »

eru wrote: post #122
dkokelley wrote: post #55

Earlier quoted context omitted.

USAA banking is available to everyone. Some nicer services (deposit by phone, insurance) are for service members only. For what it's worth, my brother (Air Force) sold me on USAA after he signed up with them. I worked at Wells Fargo at the time, so I had the best accounts. I'm happy I made the switch. Also, their web interface and iOS apps are excellent. By far the best I've seen.

How does deposit by phone work?

Like others have said, there is an app. Prior to the app (and still available), you would scan both sides of the check and email the images.

They also have a deal with UPS that allows you to go to a UPS store where they swipe your ATM card, scan the check and process the deposit. It's free. I believe the UPS method is the only one available to USAA bank customers that are not eligible for the insurance products. It's not too bad. There are a lot of UPS stores and their hours are at least as good as most banks.

Re: The $36 soda: Overdrafting in America

#165

Post by dodedo »

noahth wrote: post #12
bdhe wrote: post #6

Earlier quoted context omitted.

It's a very easy trap to fall into if you're living check to check and make even the slightest mistake. In each such story online, I've heard a claim that they specifically have algorithms to maximize the penalty fees on these mistakes. Its another instance of a practice that disproportionately affects the poor. Unless you're living paycheque to paycheque, you would never even bother looking into such niggling detail…

and when you are living paycheck to paycheck, you don't often have the time or energy to wander the maze of niggling details.

Time and energy? Perhaps. I think the primary issue is math and accounting illiteracy. Most Americans have no financial education whatsoever.

Re: The $36 soda: Overdrafting in America

#166

Post by younata »

Confusion wrote: post #115
younata wrote: post #42

Earlier quoted context omitted.

This is precisely why I have USAA as my bank. I was originally going to get a Wells Fargo account, but that changed when I decided to go to uni in Florida - before the wachovia merger happened. My father decided that not being able to keep tabs on my account was a dealbreaker, so I ended up getting a USAA account. Worked out for the best, because USAA has some of the best customer service in the industry.

You're going to uni, but your father keeps tabs on your account? I don't know whether it's you or him, but really, you should both be able to trust you to take good financial care of yourself. It's an ability everyone needs and that you can't learn early enough.

He probably doesn't keep active tabs. I doubt he wakes up and says "I wonder what bought yesterday" (if he did, that'd many boring weeks, followed by a day where I went grocery shopping).

as caw[1] said, it's really more so that he can easily transfer money to the account in the event I need it.

[1]: http://news.ycombinator.com/item?id=3158076

Re: The $36 soda: Overdrafting in America

#167

Post by jeffool »

gujk wrote: post #72
jeffool wrote: post #24

Earlier quoted context omitted.

I'm not sure why people are downvoting you... I get what you're saying and don't completely disagree. But I think it's worth noting, because I'm not sure if I got the point across: I was intending to overdraft on the final, large fee. The insane overdraft fees only affected me in an unexpected way because they go out of their was to also screw people on the order of withdrawals.

Isn't "intending to overdraft on the big charge" analogous to "intentionally reading from freed memory because you think it hasn't been reallocated yet"? relying on undefined system behavior is dangerous.

Like eru suggested, I had an idea of what was to happen based on my understanding; I would incur an overdraft free on that purchase. Little did I know there were cases I'd not known about.

Re: The $36 soda: Overdrafting in America

#168

Post by [deleted] »

mcherm wrote: post #149

I work for a US bank, "ING Direct". On our "checking" account (electronic payments preferred), our policy for overdrafts works like this: if you overdraw your account, we do NOT charge you an overdraft fee. Instead, we automatically turn it into a loan at typical unsecured lending rates (11.25% today: prime plus 8%). As soon as you deposit enough money to go back to a positive balance, we go back to paying interest o…

[deleted]

Re: The $36 soda: Overdrafting in America

#169

Post by dodedo »

Personally, I never use my debit/check card. I only use credit. There are much stronger consumer protections. I can contest/deny a charge, and not pay until it's resolved. No fees. Cash back. A free, no interest loan on which to float my purchases until the end of the billing cycle.

It is amazing to me that people use, or even sometimes prefer, their debit card over a regular credit card.

Re: The $36 soda: Overdrafting in America

#170

Post by jm4 »

noahth wrote: post #12
bdhe wrote: post #6

Earlier quoted context omitted.

It's a very easy trap to fall into if you're living check to check and make even the slightest mistake. In each such story online, I've heard a claim that they specifically have algorithms to maximize the penalty fees on these mistakes. Its another instance of a practice that disproportionately affects the poor. Unless you're living paycheque to paycheque, you would never even bother looking into such niggling detail…

and when you are living paycheck to paycheck, you don't often have the time or energy to wander the maze of niggling details.

I disagree. Living paycheck to paycheck is not necessarily exclusive to lower earners or those short on time. Personally, when I did live paycheck to paycheck I had nothing but time. For most Americans, more money means bigger bills. Got a raise worth $300/mo? Let's go get a new car that's going to cost us $400/mo!

I understand that some people work multiple jobs, take care of kids, etc. Those people barely have time to breathe, let alone manage finances. Even so, managing finances is a fact of life.

Time, more money or whatever else you can think of will not break the cycle of living paycheck to paycheck. It requires a change in attitude and habits. The first simple fact is you have to spend less than you earn. It's a basic concept that so many people fail to grasp. If it's payday and you have leftover money from the last check you have savings. Don't go out and spend it like it's found money. Set it aside. Do this over and over again and you have an "emergency fund". Guess what? Now you are not living paycheck to paycheck. The second is that you have to take on an active role in managing finances in order to accomplish this. That means planning, budgeting, tracking and adjusting. The most difficult part is making the decision to start and then taking the first step.

There a hundred excuses one could come up with for living paycheck to paycheck, having debt or some other financial mess. Predatory banks, too little money (when still earning more than a reasonable amount), not enough time. None of it changes the fact that you are still living paycheck to paycheck. The only thing that changes that is planning your own finances instead of letting these other things plan for you.

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