Comments on: Federal Reserve Issues New Rules for Overdraft Fees

By: Jim

Jim — Mon, 28 Dec 2009 19:14:35 +0000

This is all bull crap. The banks are now using a tool that was to cover the bank cost of processing overdrafts and are using it as a cash cow. I do admit in having overdrafts but there are always reasons for an overdraft. Consumers will NOT just throw away their money for no good reason. As myself I am disabled and have a very tight budget and my account runs very close to the wire sometimes. But the bank I deal with is like vultures waiting for an opportunity to hit me with an overdraft.
I am happy for those who never have an overdraft, but should not praise the banks in their unethical way they do business.

Okay that is my 2 cents worth..

Jim

By: Evan

Evan — Mon, 16 Nov 2009 19:44:37 +0000

I don’t get it!

Every action has a reaction – does the federal reserve really believe that the banks are going to throw away $40 Billion in overdraft fees?

Just like CARD – this will result in a reaction by the banking industry that won’t be favorable

By: Kristen from FiLife

Kristen from FiLife — Mon, 16 Nov 2009 00:10:37 +0000

Sure, it’s fairly easy to avoid paying overdraft fees (and it’s getting easier given the emergence of mobile banking). But it still makes me mad that banks have profited by structuring their so-called overdraft “protection” to include layers and layers of fees. Banks have profited from hidden fees in products targeting the basic consumer (like checking accounts, mutual funds, 40k products etc.) for too long. We consumers need to get smarter. And banks need to offer high-quality, transparent products.

By: Holly

Holly — Fri, 13 Nov 2009 17:25:50 +0000

When did it fall out of favor to keep a checkbook with all debits/credits? This is something that I thought was a basic tenet of fiscal responsibility.

If you are bogged down by chronic overdrafts (or if your teenager or college-aged kid is!), TRY THIS:

–Open a separate online savings account with ING (ingdirect.com) or other high-yield account. Opt to have $50 automatically (ACH) withdrawn from checking and deposited into savings…schedule the transaction to coincide with each pay period, either weekly, bi-weekly, every two weeks, whatever;

–Once you’ve managed to save up $250, go ahead and transfer it back into your checking account. ‘Forget’ the $250 is there in your checking…this is just a buffer to keep you far, far away from a zero balance, so HANDS OFF.

–Repeat the savings pattern until you have amassed an extra $1000 (or more) in your checking account. It sits there to save your a$$ in case of overspending and may also serve as a small emergency fund should you need funds in a hurry.

NOTE: Be careful transferring the savings back to checking…you can put money INTO savings accounts as often as you like, but banks limit the number of times one can transfer money OUT to 4 or 6 times per month (ask your bank for details).

***FLEXO–I love your site! I want to write posts for your site!!!!!!!!!!!! …Shameless plug :)***

By: Steve

Steve — Fri, 13 Nov 2009 16:14:20 +0000

The problem isn’t that people are lazy, it’s that they know themselves and *want* to opt out of overdraft “protection,” but their bank won’t let them do it, because it’s too profitable.

This is especially true with the rise of debit cards causing more individual transactions. Ten years ago, if you wanted a cup of coffee, you would go to the ATM, get some cash, and use that to buy the coffee. If you didn’t have enough money the ATM wouldn’t give you money and you wouldn’t get coffee. Today, you use your debit card, and find out when you get your monthly statement that your coffee cost you $35. (The same applies to credit cards – they used to deny overlimit purchases, but now they approve them as a “convenience” to the customer and slap on an overlimit fee.)

I have accidentally overdrawn my account a couple times, but since it’s linked to my savings account, it only cost me a $1 fee.

By: H Lee D

H Lee D — Fri, 13 Nov 2009 15:35:53 +0000

I balance my books every month when I get a statement.

By: Smithee

Smithee — Fri, 13 Nov 2009 15:33:53 +0000

I disagree. You’d be ignoring your responsibility if you didn’t bother to check your balance. People do check their balances, and they’re incorrect.

By: H Lee D

H Lee D — Fri, 13 Nov 2009 15:30:27 +0000

Overdraft fees don’t bother me because I don’t overdraft. I keep an old-fashioned paper checkbook ledger and *that’s* where I go to check my balance. The balance I get online doesn’t show outstanding checks/bills. We as a country are more and more into abdicating personal responsibility. It drives me bonkers.

By: Smithee

Smithee — Fri, 13 Nov 2009 13:43:54 +0000

The most frequent cause of overdrafts (from my experience working customer service for Bank of America) is people relying on the “available balance” number provided by the bank itself (either over the phone, at an ATM, etc.). And the most frequent cause of an inaccurate available balance is buying gas, because the gas pump only authorizes $1, instead of the $20 to $30 it really costs.

With inflated available balance information, the person then buys a cup of coffee and a muffin, and two days later has two items paid into overdraft and owes the bank an extra $50.

Here are all the ways we could fix this:

1) Get rid of debit cards
2) Force merchants to authorize accurate amounts, always
3) Teach 100% of people to keep their own register and know their real available balance (how many of your friends do this?)
4) Make overdraft protection an optional service

I think #4 is the most diplomatic choice. I handled calls from plenty of people who begged to be allowed to opt-out of overdraft protection, but the bank effectively didn’t allow it. I think this is great news, though I’d rather it came through Congress instead, since I don’t really understand the Fed.

By: Andre G.

Andre G. — Fri, 13 Nov 2009 05:49:44 +0000

I don’t mind over draft fees in the least bit. Maybe it’s because I am responsible and have never overdrawn a single cent on any of my 3 checking accounts.

As I see it, the banks are providing consumers with a service. Overdrawing on your account is YOUR fault and puts a hindrance on all parties involved, especially the bank which has to sort out your financial irresponsibility.

If you do not over draw, you do not get charged. If you are too irresponsible, don’t get a checking account in the first place!

By: Shawanda

Shawanda — Fri, 13 Nov 2009 04:03:31 +0000

I’m not angry about overdraft fees. One should be enough to motivate you to clean up your act. And uh, if Bank of America thinks I’m going to pay them an annual fee…we’re finished.