
The most profitable source of income for banks? Overdraft fees - mrmirz
https://www.loannow.com/bank-overdraft-policy-reform-overdue/
======
staunch
The pain overdraft fees cause poor people is truly hard to comprehend unless
you've been there. It's incredibly evil.

You've got $16 left for food and then then the Flickr account you forgot to
cancel gets charged to your account, putting your balance at -$9. Now you have
to pay $35/day until you get enough money to cover the overdraft fees. You end
up paying $100+ for a $9 forced loan.

The bank could have just declined the charge and let you deal with it, but
even though you have overdraft "protection" turned off, they've decided to
classify this transaction as an on-going contractual relationship, letting the
charge through so as not to "inconvenience" you. Bankers are inventive at
skirting the law.

They know _exactly_ what they're doing. They're rich bankers robbing poor
people.

I won't be satisified until Bank of America, Wells Fargo, and all these other
evil American banks pay back every single dime to their victims.

Until then, no one should even consider helping these evil banks when there
are good ones available. USAA is great.

~~~
mikekchar
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 is always a bit left over at the end of
the week (because there are always surprises).

The thing that is frustrating for me in western countries is that using cash
is becoming more and more difficult. The last time I tried to rent a room at a
hotel in Canada, they would _not_ accept cash -- credit card only.

In the UK, I used to use my Oyster card (a pre-paid travel card for public
transit in London). I could basically use it like cash. You put in whatever
money you want at the beginning of the week and then you can use it without
worrying about over spending. If you ever travel in London, be aware that the
payment system is buggy as hell and they will over charge you badly. With the
Oyster card it's great because I can notice that my balance is lower than it
should be, go online and get a refund (seriously ... it happened at least 3
times a week for me!!!) But now they are pushing using your bank card as a
payment mechanism. They have access to all of your money and you have many
less ways of detecting when they have overdrawn (or penalized you for the
failure of their equipment to register your badging in).

Again... these companies know _exactly_ what they are doing.

As an aside... I often wonder what happened to the laws about accepting legal
tender. There are a number of times that I've been refused service because I
wanted to pay cash (hotels and car rentals being the biggest culprits). Is
this actually legal?

~~~
silveira
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.

~~~
ams6110
It rarely happens. Like cops shooting unarmed people in the back, it isn't
something that you really need to worry about.

~~~
TDL
Even if it's (asset forfeiture) a statistically rare event, we have to worry
about it because it is a deeply corruptive practice. Asset forfeiture goes
against much of the philosophical underpinnings of this nation.

------
some-guy
About five years ago I worked at Wells Fargo as a teller while in college.
During that time Congress passed a law prohibiting debit transactions from
going through if there weren't enough funds in the account. Shortly after that
we were told to start telling our customers about a new service called Debit
Card Overdraft Service which was marketed as a "convenience" for customers
when they were in a bind.

When I asked my branch manager about this service in person, he said he was
told by his manager that the company was going to lose billions of dollars due
to the new law and that this service was meant to alleviate those losses. I
filed an ethical complaint since I believed that it violated one of their Team
Member Codes of Ethics regarding "encouraging reckless financial behavior". It
pissed off my manager, which pissed off his boss, and then I had a round table
meeting with them. My manager then claimed that he never said anything about
losing money, and that the new service was unrelated to the new laws passed in
Congress. Since I couldn't prove he said those things I decided to drop it,
but he told me I no longer had to advertise the service.

It still irks me that there was absolutely nothing I could do about the
situation. After I quit some of my co workers told me that they were told that
the service was used to make up for lost revenue also, but they were afraid of
speaking up since they didn't want to lose their jobs. I had less to lose
because I was a college student studying CS.

~~~
oasisbob
I was working at a credit union during the same time, and I found the
immediate change in rhetoric really disheartening.

Overnight the line for overdrafting your account went from, "You're being
financially irresponsible by not properly balancing your account - you deserve
the fee" to "Overdraft Protection is like an umbrella - nobody expects it to
rain, but if it does it's nice to have protection.

I was shocked at how much fighting there in the industry to carve out
transaction types from the opt-in behavior.

~~~
colanderman
I'm surprised and somewhat disheartened to here that there are credit unions
which follow this practice. Doesn't seem to really fit with their charter.

------
stevewepay
This is a quote from Michael Lewis' The Big Short, I'll never forget it:

 _Obsessing over Household [Finance Corporation], he attended a lunch
organized by a big Wall Street firm. The guest speaker was Herb Sandler, the
CEO of a giant savings and loan called Golden West Financial Corporation.
“Someone asked him if he believed in the free checking model,” recalls Eisman.
“And he said, ‘Turn off your tape recorders.’ Everyone turned off their tape
recorders. And he explained that they avoided free checking because it was
really a tax on poor people — in the form of fines for overdrawing their
checking accounts. And that banks that used it were really just banking on
being able to rip off poor people even more than they could if they charged
them for their checks.”

Eisman asked, “Are any regulators interested in this?”

“No,” said Sandler.

“That’s when I decided the system was really, ‘Fuck the poor.’”_

~~~
Touche
> form of fines for overdrawing their checking accounts.

Why in the world shouldn't you be fined for overdrawing your checking account?
A checking account is not a loan, am I wrong in thinking this quote is B.S.?

~~~
selectodude
The charge should be declined, no different than a credit card. Allowing it to
go through and then charging usurious fees is wrong.

~~~
Touche
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.

~~~
themartorana
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..."

~~~
Touche
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.

------
stephengillie
This is one of the financial barriers that severely impacts the ability of
poor people to amass monetary wealth, but is invisible to the rich. Before
they were overdraft fees, they were Non-Sufficient Funds fees for
overdrafting, and these NSF fees still exist for those who can't even get the
"overdraft loan".

> _Banks originally offered clients this service as a courtesy._

Banks originally opted in at-risk customers. This was before payday loans
became popular, and the market is one and the same. If you were short of funds
this month, you'll probably be short next month too.

Source: personally being an at-risk customer who was opted in without asking.

~~~
noonespecial
The most egregious example that has happened to me: I had a checking account
with a hidden $5 fee if the balance went below $5000 in a given month. I made
a big purchase, left the account with about $3 in it and scheduled a transfer
from savings for the next day... you know how it played out: $5 fee on the low
balance, $50 charge to "borrow" the $2 all taken from the transfer the next
day. They call that a "service". ha.

~~~
fredkbloggs
Couldn't wait until the next day to make the purchase? Couldn't use cash or a
credit card instead?

You're an adult. You're obviously literate or you couldn't be posting here.
Unless these fees were not disclosed to you (a MAJOR breach of the law if
true), you had every opportunity to know that this would occur and to prevent
it. Try taking responsibility for your own actions.

~~~
mbrameld
You can't imagine a scenario where a responsible adult has had a checking
account with a balance over $5000 for many years and has never run in to the
charge for dropping below that level, eventually forgetting about that $5 fee?
Now if you managed to picture that and believe it's possible for a responsible
adult to forget about an obscure fee his bank has never charged him before,
try to imagine your home's AC goes out in the middle of August when it's 100
degrees out. Now you're stressed out but you've got enough money in checking
to cover the replacement that day, so you call somebody out to replace it and
schedule a transfer from savings the same day. Can you maybe see just a little
how a mistake like that could happen to a responsible adult? Do you have every
possible fee your bank charges committed to memory?

And finally, are you trying to add anything to this discussion or just
displaying your self-righteousness?

------
Cacti
It's important to keep in mind that "overdraft fees" is a complete horseshit
of a term. The banks could easily just deny the transaction... there's nothing
in the universe that says you have allow your customers account to overdraft.
As the link says, these really are not fees, but short-term high-interest
loans, extended by the bank to the customer, with an intent little different
from other high-interest short-term loan places.

These are LOANS, not FEES, at HIGH INTEREST rates, and they're aimed
SPECIFICALLY at the poor, because they're the only ones without other options
or recourse, and the least likely to fight the issue when it happens.

~~~
MereInterest
In addition, the fact that they label it as "overdraft protection" is
thoroughly ridiculous. Overdraft protection should protect me from overdrafts
by denying a transaction. Instead, the worst effect of the overdraft, being
charged an additional fee, is applied.

~~~
ceejayoz
Bingo. It makes the overdraft _worse_.

------
polishninja
I've worked at a credit union for many years. The fees from overdraft charges
probably come in second or third behind loan interest income. There are a few
community banks / credit unions that don't charge a fee if your overdraft is
less than $5 or if you bring the account current within 24 hours. I think this
is a step in the right direction.

If you overdrafted at the credit union, we gave you a $500 limit and 30 days
to pay it back. For $35 you could borrow $500 for a month. The problem is,
people would pay the $500 back and the next day withdrawal it again. They
would be caught in a cycle of this, very similar to payday loans, for months
or years.

There we so many fee reversals at the credit union I was at the instituted a
policy that said any fee reversal had to be approved by the CEO or VP of
Retail operations. We were refunding millions of dollars in fees a year. That
cut down on the reversals for sure but didn’t help the consumers.

I have an overdraft loan ($500) that just draws (transfers) funds to the
checking if I go over. The only thing I pay for is the interest, which is a
lot less than an overdraft fee. That's if you can qualify for a loan though,
which can be tough if you don’t handle your finances properly.

------
worldadventurer
Bank of America had some pretty bad practices where they would reorder the
sequence of debit transactions, largest amounts first, to maximize the number
of overdraft transactions: "the bank mixed up the order and delayed the timing
of debits and transactions to maximize the possibility customers will
overdraft accounts".

They got sued and settled for $410 Million in 2011:
[http://www.bloomberg.com/news/articles/2011-02-05/bank-of-
am...](http://www.bloomberg.com/news/articles/2011-02-05/bank-of-america-to-
pay-410-million-to-settle-overdraft-case)

[edit: spelling mistake]

~~~
zacwest
Their argument for doing is compelling. They figure larger purchases like rent
or car payments should go through above smaller ones. It feels like the person
doing the reordering was a different person from the one setting charges.

~~~
jellicle
Err, their explicit practice is to send through ALL purchases; that's sort of
the point of milking the overdraft cow.

The person doing the reordering is _exactly_ the same one setting the charges.
The reordering is done to maximize profit.

"Bob, here are five transactions. You must process them all sequentially. No
law regulates the order you must process them in. They were received in order
A,B,C,D,E, however you need not process them in that order. Processing them in
the order C,D,B,A,E maximizes the profit for us, your employer. What order
should you process them in, Bob?"

------
colanderman
If you're in the US, ditch your bank and find a credit union (or failing that,
a cooperative bank). They are financially beholden to their customers (what a
novel idea!~), so they don't pull this kind of shit.

Ever since dealing with unwanted overdraft shit from Citizens Bank (may they
rot in hell), I swore off the adversarial relationship of commercial banks and
found a nice credit union. With them, I once overdrafted my account slightly
(forgot about an ATM fee or some such), _and they ignored it for months_. I
only found out about it because they casually mentioned it when they called me
about something else. No fees whatsoever.

------
hippich
I was bitten by overdraft fees few times, and after much complaining all fees
were waived. BUT, every time I insisted on disable all kind of overdraft
protections and simply dishonor ACH charge or paper check if balance is not
enough. I've been told that even in that situation they will still charge NSF
fees if check was authorized (and yes, recurring transactions are authorized.)
They also offered to stop specific check. This will cost... same amount as NSF
fee. Also, they can freeze account, it will cost... same amount as NSF fee,
(and same amount to unfreeze)

This is local smallish CU...

------
rdtsc
Another take on the ridiculousness of overdaft fees is presented by Louis CK
in this "I am broke" skit.

[https://www.youtube.com/watch?v=-n4DRcGJQo8](https://www.youtube.com/watch?v=-n4DRcGJQo8)

Some quotes:

"Did you ever get so broke that the banks starts charging you money because
you don't have enough money"

"Sir you only have $20? How can you only have $20. -- Look, I am not being
broke just to fuck with you, I really just don't have any ... money. I am not
trying to be a dick"

"So they charged me. They charged me $15. That's how much it costs to have
$20. Here is the fucked up part, now I only have $5. What did I pay the $15
for if I don't get to have my $20!?".

------
javajosh
My father was dying and I'd moved home to help him out in his last days. He'd
lasted longer than we thought, and so I was very low on money. But he wanted
something from the store, and it was cheap, and I went to get it. It went
through, but I got a $35 overdraft fee for something like $0.50 over. I was
angry, and the woman at Wells Fargo chastised me for not checking my balance
by phone before charging anything. Mind you, this was _after_ I told my bank
to just decline any charges that would put me over.

I left Wells Fargo that day and have never been back to them or any other big
national bank.

------
rokhayakebe
_If you don’t want your account to come with overdraft services, clearly tell
your bank or credit union to decline purchases that exceed the money in your
account._

Well, Wells Fargo charges $35.00 overdraft fee. Or if you choose to decline,
they charge $35.00 for unaccepted charge. Either ways you'll be paying Wells.
Oh well.

------
ajmurmann
When I first moved to the US as a student from Germany I kept most my money in
Euro cache and only covered what I needed in the coming weeks because the Euro
kept going up pretty quickly. I will never forget how furious I was when I got
an overdraft fee. It took my wife quite a while to even explain the concept to
be because it seemed so completely nonsensical coming from Germany. In Germany
the bank would be set on fire for this by leftists.

------
codezero
Overdraft fees are maddening. I can't even imagine how bad they would be if I
were strapped for cash.

I admittedly am not great at managing my accounts, but, it blew my mind that
the following situation could (and did happen):

I got paid monthly, let's say it was $5k USD. At the end of the month, I may
or may not have enough money in my account, for, say, a day or two.

So, I go to buy a coke at the university shop. No problem, costs me $1.25, but
I used my debit card.

Now I get a $35 fee because my account was at $.75

That makes sense right? Given that the bank has significant historical
information that I will get paid in less than 48 hours, how am I a risk?

OK, so I bought another soda, later in the day, another $35.

Whoa! $70 for two sodas.

Kill me now.

What's worse... I couldn't set my account to reject these transactions. Either
I had to always monitor my account, AND make sure that none of the services I
subscribe to ever charge me in this specific time period.

It wasn't until specific laws were passed that I could make my account follow
these rules, and this was about 2009, or 2010.

I paid at least $1000 to the bank in overdraft fees over the course of a few
years.

In fairness, these are the only fees I paid to the bank, and probably, if this
were the cost of banking (less than Spotify!) I probably would have paid them
happily.

The problem with these charges is that they were volatile, a surprise, and
scraped the bottom of the barrel when I was least capable of handling the
charges.

It's maddening, and I feel strongly for those who weren't as well off as me
who got fucked over by banks under the scheme, and likely continue to get
fucked over because the banks still don't make it easy to set your account up
in such a way that you reject overdraft charges.

------
onion2k
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.businessinsider.com/chart-of-the-day-how-a-bank-makes-
money-2011-5?IR=T)

[http://www.wsj.com/articles/banks-fee-bonanza-dries-
up-14096...](http://www.wsj.com/articles/banks-fee-bonanza-dries-
up-1409699980)

~~~
mrmirz
"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...](http://independentbanker.org/2014/01/finding-more-fee-income/)

~~~
morgante
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.

------
outworlder
As a Brazilian, the whole concept of "overdraft fees" feels truly alien.

I am not aware of any banks that will charge you like that and wouldn't be
surprised if it were forbidden by the central bank. Some of them will even
charge you nothing even if the account sits in the negative for a set number
of days (10 usually). The others will just charge as if it were a loan, by the
month's end.

Now, here is the interesting part. You can expect to pay, currently, over 10%
per month on any outstanding loans. In the case of a negative balance, charges
upwards of 30% are common. So it's not like they aren't robbing people either.
They are just doing it in a less visible way.

------
raz32dust
Wow, this is truly ridiculous. I recently moved to the US (yet to set up a
bank account here) and did not know about this. Back in India, if you don't
have funds, your transaction is declined. Plain and simple. And no fee for
that, either. This is pure unleashed greed. Now I know why bankers are so
hated out here. Banks have way too much power, way more than the benefit they
provide. This whole system needs to change. Horrible!

And I am sure we are going to find this kind of shit in India soon, because
from what I see, we are blindly copying the American way over there. The good,
the bad, everything.

------
joshuak
A. Use small claims court. I have. It is very successful. The more who do it
the harder this abuse will become.

B. It is the banks responsibility to maintain an accurate accounting of funds
deposited with them.

A customer has no mechanism to instantaneously check their balance, and 'hold'
funds for a transaction, or if unavailable avoid the transaction.

The bank does. It is the debit card system.

They, not you, are responsible for using the systems they have to avoid
accounting errors.

No one should be made to feel guilty because they are poor, or for failing to
keep a ledger that only a bank has the ability to keep.

------
greggyb
>According to an ICBA survey of 200 bankers nationwide, overdraft fees
constitute their most profitable _non-depository and non-lending product._

Emphasis mine. This is an inflammatory title, not matching the article's or
any statements I see made therein.

This statement is buried in there, but if we want the title to at least be
accurate, it should be along the lines of "The third most profitable source of
income for banks? Overdraft fees - behind their two core services, depository
and lending services."

------
switch007
Pre crisis overdrafts used to be cheap. There was just a monthly interest
amount (fairly low - IIRC mine was about 12%).

Post crisis, many banks in the UK "simplified" overdraft fees by charging
rediculous daily/monthly usage charges and increased interest rates. It really
is a massive swindle when being £100 overdrawn for one day can cost between £5
and £40 [1]. You used to just have a monthly interest rate like a credit card,
often paying a few pence for going overdrawn for a day.

Of course being British, we just rolled over and took this (I did close all my
Natwest accounts after being charged £5 for being £1 overdrawn for one day,
but most banks are the same now). The people with the power have large amounts
of money in the bank and had no need to complain.

With _blllions_ in PPI being reclaimed (Lloyds alone supposedly have a bill of
£13 bn [2]), this isn't a surprise. The banks always win.

[1] [http://www.moneysavingexpert.com/banking/bank-charges-
compar...](http://www.moneysavingexpert.com/banking/bank-charges-compared)

[2]
[http://www.moneysavingexpert.com/news/reclaim/2015/07/lloyds...](http://www.moneysavingexpert.com/news/reclaim/2015/07/lloyds-
ppi-mis-selling-bill-tops-13-billion)

------
boling11
Bank overdraft and NSF fees are definitely odious. It's part of the reason why
so many poor people have switched over to prepaid and are opting to pay the
$5-$10 monthly fee for those accounts - it comes out to less for many people
and at least it's predictable.

These types of fees have been especially egregious in recent years, because
the bigger banks have had their traditional revenue sources drastically
capped/reduced (interchange & interest spread).

~~~
fredkbloggs
> These types of fees have been especially egregious in recent years, because
> the bigger banks have had their traditional revenue sources drastically
> capped/reduced (interchange & interest spread).

Maybe the lesson is that over-regulation and financial repression aren't so
good for the people. These guys are going to make money somehow. You can
create a system that allows them to do so with minimal harm while providing
valuable services or you can take away every stream of revenue except the evil
things they haven't thought up yet. America is clearly opting for plan B, and
it's working about as well as you'd expect.

~~~
rev_bird
This seems like a politically motivated conclusion -- I just can't find any
evidence that it's necessarily true.

I really can't see how "over-regulation" is the cause of banks behaving badly
-- their core business is ostensibly to charge interest, right? That's still
legal and, in the US at least, loans (for school, homes, etc.) are an almost
celebrated social rite of passage.

I just can't look at banks knowingly screwing their customers and react with
"they need less rules." If anything, this behavior is evidence that banks
cannot be trusted to act in the public interest, if only because there are
much more substantial financial incentives to act like assholes. Regulation is
in place because it's absurd to just say, "oh, they'll be nice, why would
anyone be mean to people in exchange for huge sums of money?" It fills in the
moral gaps that the market doesn't enforce.

~~~
fredkbloggs
It's pretty obvious that banks do not act in the public interest. I'm not sure
why anyone would expect them to. They are for-profit corporations and they
will do everything within the law to increase those profits.

The US regulatory strategy with respect to banking is to limit the interest
they can charge (often to a level below break-even), limit the set of
customers to whom they can make loans, limit the terms on which loans can be
made, require them to do business with a particular central bank that does not
pay interest, require them to hold a certain amount of capital in forms that
you dictate, prohibit them from charging fee A, then when they start charging
fee B (legally) instead, prohibit that too.

Under the circumstances, I don't see why anyone should be surprised or upset
that they then stop charging fee B and start charging fee C instead.

If you want the government to do something that would actually help people,
you should be looking at all the laws that effectively prohibit the use of
cash. Or the laws that in many states require doing business (with fees!) with
a bank in order to get paid, or to take advantage of public assistance
programs. Start by accepting that banks are not charities; they are never
going to act the way you would like. What you can do is to give people good
options that don't involve banks at all, then let the market sort it out. When
you force people into banks, you're setting yourself up for disappointment.
You will never be able to regulate away every last way to make a profit, and
if you did manage to do so then you would rapidly find yourself without the
ability to conduct any transaction -- because you've legislated everything
into the banking system (where you can watch it and dictate to everyone in
world). It just doesn't work.

~~~
rev_bird
That's an interesting angle that I hadn't considered -- I get that it's
unreasonable to ask banks to be a public trust AND a public corporation at the
same time, but maybe separating the "for-profit business" side of things from
the "financial services necessary to just be alive" side would be more
productive for everyone. Just never occurred to me, for whatever reason.

Thinking more about it, this seems like a similar problem to one some states
are running into with privatized prisons and "public" schools -- corporations
are put in charge of public services and are doing a horrifying job in some
cases, because their business is oriented toward profit, not "the public
good." I'm not saying the companies are acting unreasonably, but maybe some
things should just be set aside for something other than profit...
firefighters come to mind.

------
iamchmod
I'm really not sure why this is news. It's been covered all the web previously
that banks make a lot of their net profit from overdraft fees. Here's a couple
recent articles: [http://www.fool.com/investing/general/2015/06/17/bank-of-
ame...](http://www.fool.com/investing/general/2015/06/17/bank-of-americas-
overdraft-policy-is-clearly-impro.aspx) [http://247wallst.com/banking-
finance/2015/06/17/banks-making...](http://247wallst.com/banking-
finance/2015/06/17/banks-making-the-most-from-overdraft-and-atm-fees/)

------
wnevets
Why bother with a bank? Find a local credit union

------
bryanwbh
This is not at all, correct.

The most profitable source of income for banks is non-interest bearing
checking accounts. On an overnight basis, Fed Fund Rate is 0.25% and Overnight
USD LIBOR is at 0.133%. However these checking accounts pay nothing to
customers. So, whenever customers deposits any amount of money, banks easily
earn at a minimum 13bps out of it.

That is free income for the bank.

Other lucrative source of income for banks are interest bearing checking
account and savings account as they pay peanuts to customers compared to what
they can lend out to the interbank market.

Disclaimer: I work for a bank in the treasury dept

------
EGreg
Many times in the past, I've learned the hard way that when you ask the bank
to STOP paying any charge that would take the account negative, they say OK
but then have enough loopholes that the request is essentially meaningless.
They STILL apply the overdraft and there's no way to turn it off! I thought
laws were recently passed to prevent this behavior, but I guess not.

------
Johnie
Here's a good breakdown of checking account profitability:

[http://www.bankdirector.com/index.php/issues/retail/the-
prof...](http://www.bankdirector.com/index.php/issues/retail/the-
profitability-of-the-average-checking-account/)

------
morgante
This title should be changed, as it is not the title of the article and even
more importantly seems to be pure clickbait.

No source is cited for $37 billion in overdraft revenue and even if that
number is accurate I'n highly skeptical that it's the most profitable line-
item in a $1.26 trillion dollar industry.

------
kevinSuttle
I remember when these were added to my account as a poor college kid.
Devastating. It used to be, swipe -> no money? No purchase.

------
yuhong
I wonder what would happen if for profit banks didn't have savings accounts
that accumulate interest.

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

~~~
vonklaus
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.

------
pedro50
Fuck the banks.. when u down they will punish you.. and even creating a new
bank means you can punish.. FUCK THEM ALL

------
fredkbloggs
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 homeless Vietnam War veteran who saves
orphaned children on weekends and singlehandedly saved the world from nuclear
annihilation last week. Twice. They don't care. Not one tiny bit. They're
probably bastards.

So why in the name of all that's sane and holy would you _give them money_ by
falling into the traps that they set for you? You _choose_ to write checks you
don't know for sure are good. You _choose_ to use your debit card instead of
cash. You _choose_ to keep poor records of your own accounts. These are
_choices_ that you make, or not, despite 13+ years of free public education
that includes all the basic skills necessary to avoid this problem. And then
you complain that the bankers are making too much money charging you a fee
that you agreed to as a direct result of a transaction that you deliberately
initiated against your account. You. Not the bankers.

If you can't or don't care to keep good records, you should use your checking
account for only the bare minimum of transactions that you know for certain
you can keep track of, only when you are absolutely sure you have enough in
your account, and use cash for everything else. Basically, if it is at all
possible to use cash for something, use cash. If you aren't sure of the terms
on your account, get out your paperwork. If you lost it, call the bank and get
them to send it to you again; they're required to do so. If you don't like the
terms, find someone else; there are over 7,000 commercial banks in the United
States.

There are thousands of pages of banking law and regulations devoted to making
sure that you are aware of these fees, limiting them, obligating banks to
refund or cancel them in certain situations, and on and on. It's your choice
to pay them. It's your choice to hand those bastards a bunch of money for
lending you literally a few bucks for a few days. Yours. Not theirs.

And they're not even grateful for it. You really oughtta cut those bastards
off.

~~~
Karunamon
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 that's played
this game with Wells Fargo in the past.

But apparently, advocating for people to be responsible for their own actions
is a radical and terrible thing nowadays.

~~~
danharaj
It's probably because people usually grow out of the stage of political
awareness where one imagines human beings to be atoms that aren't connected to
one another. If you think that 'personal responsibility' or whatever allows
you to judge someone as stupid, inferior, or deserving of misery, then you
will have a bias that makes you see people as individuals cut off from all
social and economic context because it gives you the most leverage to
rationalize their misfortunes away.

People are all connected and all economic relations are social relations. If
you treat everyone without their social context, you're basically saying that
every powerful individual or institution can make relations with them a
minefield because all that matters is that it's their weaker counterparty's
responsibility to avoid all the mines. After all, everyone 'consents' to a
'voluntary' exchange. How could 'voluntary' exchanges be bad???

Your worldview is just a very immature way to rationalize predatory
institutions and hostile power structures. Actions cannot be judged as
voluntary except in context. The context that people like you and the
grandparent tend to take is, at best, one of the law or some insipid moral
principles based off of a rancid individualism.

~~~
fredkbloggs
I don't feel that I'm a weaker counterparty. If I find myself feeling that way
in a relationship, I am going to renegotiate its terms or end it.

The problem that you Progressivists have is that you cannot distinguish
apparent power from real power. A bank may be evil, but its power over you is
illusory. You are still free to terminate your relationship with it at any
time. Real power comes only from the ability to use violence, which in the
developed world is associated primarily with the government. That you cannot
tell the difference between a tax assessed by the government and a fee charged
by a commercial entity as part of a voluntary business relationship is the
reason for your confusion and frustration. And mine as well.

~~~
darkmighty
Going on that line of thought, consumer protection laws, agencies and
regulations would be nonexistent. Hopefully not everyone thinks that way.

Also, I never read about progressivism before.

[https://en.wikipedia.org/wiki/Progressivism](https://en.wikipedia.org/wiki/Progressivism)

Can you sincerely say you are _not_ progressivist after reading the
introduction?

~~~
fredkbloggs
By the original philosophical definition, I'd probably qualify, though my
affinity for the ideas is marginal. I'm not really convinced that our
"advances" have improved the human condition. A few have, many others have
not, and on the whole I think our species is in worse shape than it was 300
years ago. I'd like to think that an increase in our empirical knowledge would
lead to an improved human condition, but empirically that doesn't seem to be
happening. It might end up being one of those theories that lends itself to
proof by elegance, but when tested just plain doesn't hold up. The string
theory of its day, perhaps.

Unfortunately, Progressivism in 21st-century America bears little resemblance
to Enlightenment thinking. It is a toxic brew of extremely hardcore Communism
(Marx would have been appalled), beyond-stifling political correctness,
defeatism, and a vicious temporal smugness that glorifies both ignorance and
denigration of anything at all involving the past. Because of course we're so
much better than they were. Not just more knowledgeable about the Universe,
not just given the benefit of more experience, but _better_. Anyone who says
otherwise is "speaking from privilege" and must be ignored, shouted down, or
ideally punished or removed entirely from society (so that it can make more
progress, naturally). Better men than I have commented on the astonishing
narrowness of the range of ideas and narratives acceptable to these ideologues
who demand inclusiveness. This philosophy wouldn't even be worthy of comment
were it not occupying the entirety of the Overton Window.

To bring this to bear on the topic at hand, since Progressivists hold that
everything that exists today is superior to whatever version of it existed in
the past, it must be true that our gigantic bureaucratic regulatory regime is
in every way superior to what it replaced (small government, laissez-faire
market capitalism, individualism, etc.), we can make further progress by doing
more of that. Since our system of laws has become so large and unwieldy that
it's essentially impossible to comply with it, we may well make further
progress by simply penalizing anything that smacks of success (undeserved, of
course). Since our taxes are so much higher than in the past, we can naturally
improve our lot in life by raising them further. Since we're better people
than previous generations, we know better than they did and may safely ignore
the lessons they learned in these matters (the Soviet Union, the 1950s-1970s
tax regime, etc). When it comes to government, more is better, always and
without exception. Anyone who has money, regardless of how obtained, is to be
punished -- not for stealing it, but simply for having it. It's much easier
than punishing crime, after all, and since people with money had a lot of
power in the past, the future will be better if they have less. Ideally, less
than none. Instead of punishing individual behavior, it's easier to just
punish people who seem similar to people who were successful in the past (the
decadent, evil, exploitative past again). It saves the trouble of finding
evidence of wrongdoing, and after all, everything balances out in the end,
right?

So we don't need to bother with the rule of law or written contracts;
whichever party, historically speaking, was in a position of lesser advantage
must prevail in any dispute. Anyone who's less than hopelessly impoverished
and disenfranchised must have achieved that exalted position through fraud,
theft, or murder; how else could one prosper in that past? And surely anyone
who is poor today owes it not to any defect in himself but to the inescapable
injustices of that past. Else what progress do we find in the march of
history?

So if you're a banker, it doesn't really matter whether you've followed the
law. It doesn't matter if you've disclosed your policies properly and timely.
It doesn't really matter because you're a banker and the other guy isn't.
You're wrong, and you'll always be wrong, and you'll keep being wrong no
matter what you do until you give up and die.

Progressivism, in a nutshell, seeks to replace rule by law with rule by
victimhood, just as the original version sought to replace rule by sword with
rule by law.

Afraid I'm just not having any. But HN sure is.

~~~
dang
Please stop using HN to conduct ideological tirades. You've been crossing into
personal attacks, taking discussions into flamewars, and behaving high-
handedly. None of this is good conversation.

Everyone with an agenda thinks that they're enlightening the world with their
rhetoric ("in the desperate hope that some young people will read this and
understand") and imagines themselves surrounded by enemies ("this is one of
the most heavily Progressivist boards on the entire Internet") while they of
course are simply offering "facts". What's striking is how predictable this
pattern is and how little it depends on the content. You could easily, and
many do, have the opposite politics and behave the same way and make the same
claims about other people. On HN this typically includes self-flattering
interpretations of downvotes.

This is little different from preaching on a street corner, haranguing
passers-by. When passers-by react badly, it's apparently irresistible to
conclude that they're cretins. But really it's just that most of us don't like
being preached at. I'm sure many of the people downvoting you agree with at
least some of your views. But when you're trying to have an interesting
conversation and ideologues show up with megaphones, it's a real bummer. And
HN being a public forum, it's not like there's a quieter street corner we can
all retreat to.

