
How banks screw consumers, or how your negative balance keeps them afloat - shortformblog
http://shortformblog.com/biz/where-do-banks-really-make-their-ill-gotten-money-overdraft-fees
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patio11
In the spirit of "competition works", I've got a suggestion for anyone here
who is still in poor college kid mode and overdrafts:

Sign up for ING Direct Electric Orange checking. They charge interest, not
fees, on overdrafts, something on the order of a 9% APR. So, if you go over on
your checking account by $1, and you realize this when they text you and cover
it a day later, you owe them less than a penny. Don't make a habit of
overdrafting, obviously, but this will save you substantially if you have a
sudden attack of forgetfulness once or twice a year.

Obviously, since they're charging money on the actual amount your account is
short by rather than per-NSF-transaction, it doesn't matter what order they
process your transactions in.

Suggestion for people who are no longer in poor college kid mode: Don't spend
more money than you have in checking. Simple and effective!

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bmcleod
Suggestion for people with discipline. Keep money in savings and pay off your
credit card every 50 days.

Slightly less worthwhile with current interest rates unfortunately, but still
a good habit.

My card has 55 days interest free, may as well make the most of it.

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akronim
isn't that typically "Up to 55 days" i.e. you still have to pay it monthly?

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kyochan
Regulating overdraft and overlimit fees doesn't lower the demand for
overdrafting or overlimiting. Regulations that lower the penalties for
overdrafting will likely raise demand.

If you regulate the demand side like limiting or banning overdrafts, let's
just say drug dealers can do a bit more business with their pocket money.

Banks charge outrageous fees because consumers are willing to fork over a lot
of money later for money immediately.

Wanna stick it to the banks and credit card companies? Don't overdraft and pay
your balance in full and on time and collect reward points or cash back.

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dasil003
I'm a bit torn on this one since things like delaying settlement and changing
the order of transactions is just plain shady. Would the executives who made
these decisions stick by them if they had to actually deal with the angry
customers? I realize it does self-regulate to some extent, but there's always
a new generation of young people coming in to take their lumps.

All that said, as an individual you need to look out for yourself. If you
overdraft or run CC balances then you are just throwing your money away. I
finally put my CC debt to rest last year, and have been able to start saving
serious money. I'm never going back, I watch my budget like a hawk now.

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jpcx01
I switched to a credit union 8 years ago when Washington Mutual charged me 300
dollars in fees in a single month (10 accidental overdrafts in one week).

Havent been charged a fee since.

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sgman
These numbers are lacking context. What percentage of their total revenue do
these fees make up? Is $50b even a drop in the bucket when considering all the
banks in the United States?

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trezor
Or: How consumers are screwing themselves by spending more than they can
afford. Get over the victim mentality. You are responsible for your own
actions.

Just because the bank offers you credit doesn't mean you have to take up on
the offer and use it. You know there are fees. Don't act surprised when you
have to pay them.

If my job was to keep people's money safe and give them access to it when they
needed it, and they constantly withdrew more money than they put in, I would
also demand some sort of compensation for their lack of discipline and
economic rigidness.

