The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.
Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.
overdraft fees only affect people who don’t have a lot of money. I remember being ruined by them as a college student several times. they should be illegal. let them figure out how to get the operating revenue from people with more capital.
I dropped Wells Fargo after they re-ordered my pending payments to maximize overdraft fees.
I’d actually overdrawn like 25 bucks after making a couple 3-5 dollar purchases followed by $50 purchase. They moved the big payment up front so each of those little payments incured a 30 dollar fee.
Fuck them.
I had that happen too with BoA, a long time ago. My initial reaction was “how in the fuck is this legal?!”
Then I nearly blacked out as a torrent of un-forgotten media, of all the jokes, comedic hate, and disparaging sentiment towards banks, flooded back to my minds eye.
Sadly, my only answer to this problem was “make more money”, which really isn’t an answer at all. Later, I switched to a credit union, which I would have done earlier had I known that was an option.
My sister has an almost identical story with that bank.
Had U.S. Bank do that to me when I was a high-schooler on my first job. Time stamps on the transactions came in pending - next morning I had 2 overdrafts and fees to go with them. Cleared that account out the next day after getting them to waive the fees.
It’s actually worse than just debits before credits. It’s debits in reverse order of amount, then credits. So if you get your paycheck deposited in the morning, stop for gas, pick up a coffee, go shopping, go home and pay your utility bills and rent, they can order it so the rent goes through first, then the bills, shopping, gas and coffee all trigger separate overdrafts, then the paycheck is added last, stealing hundreds of dollars from you when you didn’t spend a cent you didn’t have.
Okay, yes, but counterpoint from my conservative relatives “Why were you simply not more responsible? I never have this problem.”
Probably because they have enough money in their account to always have padding. People who live pay check to pay check don’t have that luxury.
Yes but what you’re not understanding is that living paycheque to paycheque is actually a sign of your moral degeneracy. The system is perfect and judges us all equally and fairly.
This is an awesome proposal that 99% of Americans can get behind and I can’t wait for our oligarchs to kill this legislation before it ever gets introduced to congress.
When I was younger, I was literally living paycheck to paycheck. This was back in the day when you were handed a physical check and had to cash it, so there was a time delay between you getting your money and having to buy things like food to not starve, or gas so you can fuel up your car and go to work so you don’t lose your job. I lost count of how many times I overdrafted by just a few dollars, or even a fistful of change. One especially egregious overdraft fee was the result of being overdrafted by $0.02. At one point in time, I called the bank and asked if they could forgive the penalties for accidental overdrafts of only a few dollars or a trivial sum of money spent on necessities. They told me to take a hike, pay the fees or else have my account closed and the balance sent to collections.
I realized I was losing so much money to overdraft fees so frequently that I asked my relatives to lend me some cash to use as a buffer, and only then was I able to finally dig myself out of that hole and get stable, saving the money that would otherwise be lost to frivolous fees to build my own pool of savings. But not everybody has loving and trusting relatives like I do. Some people are all on their own. Even though my financial situation has improved dramatically to the point where I will probably never had an issue with overdrafting ever again, I still want the practice outlawed completely. I hated it so much and I felt like the world was the most unjust place ever that these slimy fucking bankers could hustle someone they know for a fact is broke by burying them in fees and stealing money right from out of their pockets when they got paid.
How about no overdraft fees? You know what we should do to people who have no money? Charge them more money.
How about no overdraft fees?
I mean, this is the same argument with student debts that we had four years ago.
You’ll get some Harvard snob issue a white paper explaining how overdraft fees disproportionately affect middle-income people (ie, people with bank accounts) and therefore eliminating them is regressive. You’ll hear a bunch of hemming and hawing from banksters, about how this will destroy jobs and create enormous amounts of bank fraud and actually technically increase fees for everyone else which isn’t fair to them. And then you’ll see a court issue some briefing about how this violates the Farts McGee clause of the Jefferson draft of the Declaration of Independence, so it isn’t an enforceable bureaucratic change in states that contain a vowel.
Finally, we’ll get ten thousand Op-Eds arguing “Overdraft Fees Are Good Aktuly”, and in six weeks I’ll be on the phone with my mother asking whether China is trying to undermine the banking system by tricking Joe Biden into defunding her mortgage. Overdraft fees will double by 2025, the Leftist Radicals in the Democratic Party will get blamed, and Donald Trump will win in a landslide thanks to “Bankrun Biden” memes that have inundated social media in the last six weeks of the race.
The issue isn’t necessarily the amount. People shouldn’t overdraw their accounts and it seems prudent for the banks to charge for giving you an impromptu quick loan.
The issue is how fees are applied. Let’s say someone overdrew their account for $100. To get there, they had six miscellaneous debits totaling $75, and their rent check, which all hit their account on the same day. Rather then settle it in time order, they decide to settle the largest first, under the theory that customers want their largest checks to have the best chance of clearing in this situation. But the rent check puts them under, incurring a fee, but then when all six miscellaneous debits hit, they each incur a fee also! If the fee is $30, that’s $210 just in fees! Even at $3, though, that customer is still paying $21 in fees. But if they processed the rent check last, the account would have only overdrawn once.
If used to be that if there wasnt enough money in the account, the check bounced. Maybe we should go back to that. But if people want overdraft protection, the bank should be limited to just one charge in a statement period. Then they can keep it at $30, but customers don’t risk escalating fees just because of the order in which banks process charges.
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But the bank didn’t support instant savings transfers and took a couple days to transfer the funds.
In case you, or others run into this in the future, know that cash (at almost every bank) posts to your checking account immediately. So for our situation if you were able to go back time and do this again, go into the bank and do a cash withdraw from savings, get the cash in hand, then hand it right back to them as a cash deposit to checking.
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I misunderstood this entirely.
Not to go on the “we have it better here”… But it hasn’t occurred to me you guys get charged a fee per transaction, that’s wild. My bank, if i go into an overdraft, will charge a % of what i owe after 24h of not clearing it. There’s no “pay X because you went under”. I pay interest on what i owe to the bank per day till i clear it.
Reposting this from below because I think more people need to see it-
If this works, making overdraft fees $3 is fucking huge.
Some points, directly from the Consumer Financial Protection Bureau:
• Among households that frequently incurred overdraft/NSF fees, 81% reported difficulty paying a bill at least once in the past year.
• Among consumers in households charged an overdraft fee in the past year, 43% were surprised by their most recent account overdraft, 35% thought it was possible, and only 22% expected it. Consumers who overdraft infrequently are more likely to be surprised by a fee
• While just 10% of households with over $175,000 in income were charged an overdraft or an NSF fee in the previous year, the share is three times higher (34%) among households making less than $65,000.
Yeah, I’ve only wrote a handful of checks in my life, and I always saw straight through the “we offer to fuck you, for your benefit!” bullshit. Decline their “offer” whenever available, the only one who benefits is the bank. If I don’t have enough money now, I don’t want the transaction to be approved and get fucked with a $35 fee “for my benefit”, and I don’t want to be hit with a second fee “for my benefit” when that becomes an “extended overdraft” when - now I know this is hard to believe but - if I don’t have money on day 1, I’m very likely to not have money on day 5.
Also, back when banks could more openly fuck you with a smile, BofA would process transactions in this order: debits, then credits. This would cause accounts to fall negative for minutes or even seconds as they processed the pending transactions, and BofA raked in fees. I was a very vocal pain in the ass for my local branch managers, and had that bullshit removed each time, but I had the time to go sit in a shitty crowded bank for an hour and bitch at whoever until I got my $35 back. Anyone with a 9-5 would be fucked.
Banks as a profit center can suck my ass. I’ve been a “member” of about 20 banks, and there are only 4 I like(d), one of which got acquired by a big bank and the fee list quadrupled while the features were slashed. Be very carefully about where you store your money - thieves are often eager to shake your hand.
Biden might be a senile old fuck, but this is a good thing.
The President can just do that?
What the hell are these other guys been doing for the last few decades?
Without trying to turn this into a political discussion, the reason the Biden administration can do this is because of work the large majority of Congressional and Senate Democrats (and only 3 Republican Senators) did with the Obama administration passing the “Dodd–Frank Wall Street Reform and Consumer Protection Act” in 2010.
One of the things that law did was create a new part of US Government called the Consumer Protection Financial Bureau (CPFB). This bureau did a bunch of stuff you likely enjoy today.
So the Biden Administration is able to work with the now-existing CPFB to put in place these great protections for consumers
Thanks Obama
This is nice an all, but when do we get universal healthcare?
Not an American. How much do you guys normally pay for overdraft? 3$ is still a lot for me
$35 usually. Then a $5-$10 per day for each day it is over drafted. Usually it caps out at a certain amount. Now a days a lot of banks let you use your savings, or credit card with them as a backup for no charge.
That’s very harsh
biden will say anything to get reelected
already had three going on four years to live up to his campaign promises like the ones that directly affects our lives
seems like he waited until election year to the throw the scraps out
https://www.politifact.com/truth-o-meter/promises/biden-promise-tracker/
