YES! The Fed is considering making debit card overdrafts an opt-in thing! End "overdraft protection"

[originalpckelly]

A month or two ago, I posted a personal story about this. I was charged a $35 fee for a $1.25 overdraft. I was unknowingly charged a bunch of fees on the same day, I hadn't expected them until a little later, when I was going to put more money in the bank.

It should be possible with a bank card to simply offer the option to decline the charge, after all they have infrastructure to decline a card that's no longer in service.

MSNBC has a story on this ABSOLUTELY FUCKING OUTRAGEOUS AND CROOKED PRACTICE!

"Would you pay $38 for a cup of coffee? Clifford Phillips of Spokane, Wash., did. He used his debit card to pay for a latte, not knowing there wasn’t enough money in his checking account to cover it. The bank could have declined the transaction for insufficient funds. Instead it approved the electronic payment and dinged his account with a $34 overdraft fee.

At most banks and some credit unions, most checking accounts are now automatically enrolled – as a customer service – in an overdraft protection program. The financial institution lets you spend more than you have, loans you the difference (up to a certain amount) and hits you with a hefty fee."

This part is the most outrageous:
"Phillips didn’t know his account had this overdraft feature and doesn’t want it. He tells me he prefers “the embarrassment of having the transaction denied” to being socked with a $34 fee. But the bank won’t let him cancel."

Even if he wanted out of it, THEY WOULDN'T LET HIM CANCEL IT?!!!?!!!

"Consumer groups are doing their best, but the regulators need to hear from you. Time is running out. The comment period ends next Monday, March 30. Contact the Federal Reserve right now and let the Board know you want the opt-in rule. It’s just silly to make you cancel a service you didn’t ask for. If bankers are so sure customers want this high-priced overdraft protection they don’t have anything to worry about."

http://www.msnbc.msn.com/id/29879567//

Here's the contact info from the article, if like any good non-banker, you don't want a bank taking advantage of you:
http://ga3.org/campaign/no_gotcha_fees

Or e-mail the Fed directly with the phrase, "Docket No. R-1343," in the subject line, at this address:
[e-mail]

You may also send in faxes to the Fed at this number, I assume that your should include the Docket No. R-1343 somewhere in it too:
202-452-3819

Let's stop this fucked up and unjust practice. It's fucking ridiculous to charge 2800% interest on a loan, which is what it was for me.

[originalpckelly]

1. Kicking to end the "overdraft protection" racket.

[mrcheerful]

2. What I found odd was SO paid to have over draft protection of up to $100

for over drafting her debit card. Well she over drafted the debit card by 15 cents, the odd thing? They took it out of her savings, charged her $15 for transfer fee's plus hit her with the $35 over draft fee. Needless to say we no longer do business with said bank.

[originalpckelly]

4. They are fucking people over so bad on this...

It's totally unnecessary to do this, and it really hurts people. I read about another DUer who's friend's kid overdrawing her account buying a few milkshakes and fries after school, the fees came to over $400! GOOD GRIEF! This is so outrageous!

And the poor are obviously disproportionately affected because they'd be the ones who would tend to have little money in their accounts.

[Uben]

3. It's easy to opt out

Use cash! I quit using ATMs and debit cards a long time ago when I figured out the bank was just using them as another tool to get fees out of you.

[dkofos]

5. My friendly credit union pulls the money from savings to cover the difference.

[Uben]

6. Mine does to....

....for a fee. Fuck that!

[originalpckelly]

7. My bank usually does that too...

but it kind of doesn't work when you're poor and don't have money in another account. The banks still charge for that.

[SoCalNative]

8. MIne too

and charges me a whopping $3 fee when they do that.

[mwooldri]

19. Mine's just as friendly... and if my savings have ran out...

... I get the negative in my checking account - but no fee. If I wrote a check with no funds then yes there'd be an NSF payment but there isn't with the debit card. The CU is also aggressive at declining when there truly are no funds to be had too.

[LiberalFighter]

9. Walk into the bank with your card and pair of scissors and cut it up

Then withdraw your money.

[Dramarama]

10. I've overdrafted once

just when buying a bottle of water at an A's game. I blame it on iTunes for taking days to process the money (I thought I had $18 in the account ). Basically a bottle of water cost $35 and I only went under .05.
Thanks for the info.

[Jackpine Radical]

11. My CU charges $2 for an overdraft

& takes it out of my savings account.

[originalpckelly]

12. Um, what if you're poor and don't have any money in a savings account?

You just assume most people have money saved up, but in hard times like this, many people are cutting it very close.

[Jackpine Radical]

16. Well, yes, of course that's true. I was just reporting what happens to me.

But if your debit card payment bounces, doesn't that constitute a crime like a bounced check?

It would obviously be better if the card was just refused rather than permit an overdraft, of course.

[originalpckelly]

20. No, because the processing is done instantly, there are some cards that decline purchases...

immediately, for insufficient funds. It's an obvious racket set up by the banks to suck money out of people. They are are basically operating loan programs that don't require an upfront alert that a loan is being made. In my case the interest on my loan was 2800%, because the fee is so much more than the minimum amount over. I have to wonder if your were over $.01 if they would charge you an overdraft fee. That would just basically cause the best demonstration of the system.

If anything, it should be a fixed percentage of the loan, like a normal loan.

[truedelphi]

13. Thank you thank you for posting this. When we signed up with our local

Credit Union, we explained we would rather not have a debit/credit card. We actually pleaded with them to not issue one for us. We were told there was no way to not have one - we were stuck with it as part of the banking program.

After M. became sick, and we lost a lot of our income, and were usually really stressed, so we ended up running up a huge amount of overdraft fees exactly as the OP Describes. (Some $ 19 worth of purchases caused something like $ 256 in charges.)

We kept getting called up by the Credit Union, about our paying the charges. We finally scraped together the $ 256 and came in to the building with it. The Credit Union agreed to take us back, but get this - AS PUNISHMENT - THEY WERE NOT GIVING US A CREDIT/DEBIT CARD!!

Go figure...

[originalpckelly]

14. It's so wrong.

Just like so many other parts of this system.

[Liberal In Texas]

15. My CU has overdraft protection on debit cards. If you don't have enough

to cover a debit, they transfer funds from an overdraft credit account ($500 limit IIRC) at credit card rates.

If it's over that, they'll transfer from one of our other accounts. NO FEES!

CUs rock. I'll never darken a banks door again.

[Emit]

17. This is how our CU does it - no fees for the overdraft protection

and, I have it arranged so that overdraft goes to my savings first, then to the overdraft credit line. Works for us.

My CU also started refunding many of those pesky fees that show up if you use an ATM that's not in their system - as long as we meet their monthly requirements (I think it's 12 debit card transactions - no minimum balance, thank gawd) then we get those ATM fees returned en masse at the end of the month. The main reason we left the bank was the darn ATM fees - those things nickled and dimed us left and right. Such a racket.

[Tyler Generation]

18. We have OD protection for $1,000 from US Bank

That one is great, only a couple dollars for the fee if we need to use it.

However we had a debit card with Chase that put the OD protection on our credit card, which was bullshit. I hated Chase, glad we took all our money out and closed the credit card there. US Bank has always been good to us.

[Leftist Agitator]

21. I agree with the general idea, but...

I have to say that if you overdraft your checking account, well, you're a fucking idiot.

You have (X) amount of money. So don't spend anything more than (X - $20), no matter what thing it is that you think you need right at this moment. Or (X - 50), (X - 100), etc. Twenty dollars of leeway has always worked fine for me, but your mileage may vary.

In 12 years, I've never overdrafted my account. Not one single time. If you absolutely have to have something right away, and your account balance is questionable, go to the bank and make a withdrawal. They won't let you take out cash from an actual human teller if you don't have it in your account.

[originalpckelly]

26. In agree with your idea in general, but...

Have you thought that maybe someone doesn't have a lot of money in this type of economic downturn? Banks charge fees for all kinds of things, and that includes being below a certain amount that's required to receive "free checking" and that's what happened to me. So sorry I'm poor and was charged a fee on that date without being informed first.

[Leftist Agitator]

27. Then close your account and deal in cash.

Not that complicated really. Use money orders for bill payments. Those are the only things that you need to pay in some form other than cash.

If your bank is fucking you in the ass, why are you giving them business?

[Lance_Boyle]

22. it's always been optional at my credit union

I opt for it, and watch my balances. :shrug:

[dickthegrouch]

23. I have been battling WaMu over this for years

Sadly my partner has little appreciation for numbers and spent more than 10% of his pay on these outrageous fees last year. Very few were for original expenses of more than $5.
Bank won't budge an inch
Chase (who bought WaMu) have raised the fee.

[SOS]

24. Thanks for the info - K 'n R

Thanks for the links. Already filled out the Center for Responsible Lending form and will do the Fed next.
We need to be heard on this outrage.

Capital One shafted me for $245 on 7 debits based on uncollected funds.
The money was there, just not cleared.
I made such a scene in the bank, they gave me back $140.

I asked to opt out of this ridiculous scam and for the card to be declined in the future.
They refused!

Stinkin' banks!

[Maven]

25. Absolutely. What it amounts to is banks charging 1000s of percent in interest

on short-term loans, which should be just as illegal as other usurious bank practices.