You're Getting A Payday Loan - And You Don't Even Know It. Banks Under Scrutiny for ATM Overdraft Fees
I went through this a few years ago. I deposited a check right before a holiday weekend at an ATM and they didn't clear the check for ten days - even though my online account already showed it as cleared. This is what debit cards do now: They let you take money out that isn't there.
They charged me $35 for every single one of my debit card transactions (it came to more than $400). When I called my bank's customer service hotline, they told me it was in my service agreement that it could take 10 days to clear something deposited at a "foreign" ATM - even though they all belonged to the same STAR network. I argued with them, but they wouldn't budge.
So I called their corporate communications officer, told them I was writing a story about my experience (noting I'd found a class-action suit filed against them for this very thing) and asked for an official statement to include in my piece. Magically, my charges disappeared and I got an apology. "You've been a customer for such a long time, we'll make an exception this time," I was told.
Isn't America great?
Controversial bank account fees, which have fattened banks' bottom lines at the expense of vulnerable consumers, are rapidly becoming a black eye for the industry.
Under siege are the fees charged to consumers who spend more than they have in their accounts, whether by check, debit card or at the ATM.
Last week, four of the nation's largest banks said they would scale back some of their overdraft policies. Their efforts, while meaningful, have failed to appease lawmakers, including powerful Senate Banking Committee Chair Chris Dodd, D-Conn., who is preparing legislation to crack down on what he calls a pattern of "abusive" practices.
At first glance, banks' practices seem reasonable enough: Overdraw your account, and the bank will cover the transaction — for a fee. The problem is, most banks don't ask consumers if they want their transactions automatically paid. In recent years, as banks realized how lucrative these fees can be, they've made it easier for consumers to overdraw their accounts, to the tune of $36.7 billion in revenue last year, USA TODAY research has found.
Banks have done this by covering debit card transactions as small as $1 and charging a fee as high as $35. Some also charge fees before consumers overdraw by deducting a purchase when it's made, instead of when it clears. And they've processed transactions from highest to lowest dollar amount — which empties consumers' accounts quicker and triggers more overdrafts.
Ironically, the changes banks have made to their overdraft policies are only fueling calls to reform the entire industry. Overdraft coverage can be less regulated and cost more than other high-cost (and equally criticized) options, including payday loans, in an estimated $70 billion short-term credit market. On average, consumers will pay a fee of $26.68 every time they overdraw their account, according to data from Moebs Services, an economic research firm. That means that if consumers overdraw by $100, they'd pay an annual percentage rate (APR) of 696%, if the credit is paid back in two weeks, according to a USA TODAY analysis. This compares with an APR of 450% on a $100 payday loan with an average fee of $17.25.
"When consumers (overdraw) recurrently, it is a credit product, and they're paying eye-popping rates," says Sheila Bair, Federal Deposit Insurance Corp. chair, who is pushing for banks to get consumers' permission before covering overdrafts, for a fee, and to disclose APRs.
Why on Earth should it take 10 goddamned days for a check to clear? Sheer corporate malfeasance, intentionally trying to screw people up with those fat penalty fees, that's why. "Overdraft protection" my ass.
What difference does it make how long it takes to clear? Whether it's one day because you gave it to a friend tho banks in the same place as you or 20 days because of snail mail. The solution is very simple. USE YOUR BANK REGISTER! Subtract out the check from the total as soon as you write it. When it's actually cleared you can put a check mark next to it, but in the meantime you wont overspend if you pretend the money is already out of your account.
While some people are not careful about recording every bank transaction, even keeping an accurate "register" does not guarantee you will not be charged overdraft or insufficient fund fees.
The majority of bank profits are harvested from these fees, and to force their customers to give them profits, banks do all kinds of manipulations of posting dates, floating deposits, etc. Their policies and practices are intentionally crafted to take money from their customers.
One of these practices includes taking out life insurance policies on their employees, illegally and secretly using their Social Security numbers and other personal information. Of course the payout profits are tax-free. Nearly half of all U.S. banks have reported owning BOLI [bank-owned life insurance] policies at an estimated value of $120 billion.
To return to the point of Susie's post, in essence, when we bank our money, we are loaning it to the bank and have agreed only that they may use interest on each account to run their business. They can make one-day or several-days large deposits to other institutions to earn interest on the deposits. What the banks are doing is robbing us of the loan principle instead of just taking the interest they earn on the money stored in their institution.
Namely, my online checking account showed the check as cleared - when it wasn't. I didn't spend a thing until after it was "cleared."
A former award-winning journalist and lifelong class warrior, keeping a jaundiced eye on the Washington elite.
Don't you just love the implication, though, Susie? I mean, obviously, we (all of us insignificant checking account customers of every bank around the world) lack the financial acumen to handle our money--and our accounts--wisely. We must be told, mustn't we?!? Even wee Suze rides this particular bandwagon--making millions telling us how to 'handle our finances.' It's enough to make me puke...great green gobs of puke all over my now worthless money...teh bastard bankers!
At the risk of sounding repetitive (since I've said this to all of my friends, repeatedly):
banks always, always, always, always, always, always (have I stressed always enough?), ALWAYS get their money.
Always.
Worked at a bank once. Worst Job EVER. Felt like a thief. If you had money, they'd give you more. If you didn't have money... They would take what little money you had and then charge you fees for not having enough money.
Late capitalism is the grotesque ugly step-sister (with syphillis); in which you the customer are penalized for even needing the service offered. It works very well for people at the top of the food chain, who have no souls.
Join a credit union!
statusquObama, change you can only pretend in
You beat me to it!! As a customer of the same bank for many years, they still charged all kinds of hidden fees for credit cards, savings accounts, etc. Joining a credit union was the best way for me to go in order to avoid all the BS. There are many CU's available with lots of options of eligibility.
Any help? Suggestions? God I hate BofA.
NOBODY 2012
there are regional credit unions that will let you join if you are a resident of the counties in which they have branches.
Note that credit unions are not always fail-safes. If you have outstanding issues with other banks who are members of ChexSystems (as I have), you may not be able to join.
"Parachutes are allowed in checked or carry-on baggage, but may not be worn in flight."
---Southwest Airlines
i have bad credit and the credit unions won't let me join. bofa was my only option.
Completely agree. Credit Unions are the way to go. And thanks to Share Branching I can use "sister" branches all across the country.
For a few years my credit union ATM card was just that. Now, of course, it is a debit card too.
More precisely, never use it as a debit card. We never do. That's what no-annual-fee credit cards are for.
A big 'ol pile of this.
My credit union has two separate balances for me: my actual amount available for withdrawal and and amount that's actually in my account (plus or minus checks/hold/etc.). I can't take out more than the withdrawal amount.
Plus I actually do get a payday loan. I get paid on Fridays, but my credit union gets the information on Thursday about noon time. Since it's payroll and they know that amount will be in my account, it gets credited to my withdrawal amount on Thursday.
Not all credit unions are created equal, so take a look around. Some are based on residency, some may be associated with various employers. Call them up and ask for membership requirements.
that's how business is done. separate people from their money at all cost. corporations are aware of accounting/billing mistakes but make it difficult to remedy the mistake. i say it's a dirty strategy. many corporations/business models make a lot of money from fees. shareholders are more important than loyality/customer service.
See? We recognize the problem and are fixing it - there's no need for regulation.
Let's use the harshest terms to describe what these banks are willfully doing - they're fistf*****g their customers without consent. And they're getting away with it, especially when they do it to their most vulnerable customers.
Bankers are quickly earning the same level of respectability child pornographers have, uh, enjoyed. I hope they're proud.
When opening a new account recently, I requested that the automatic overdraft protection be REMOVED. I told them that if a purchase of mine was not covered by my balance, I wanted them to REJECT the purchase. Right then and there - no overdraft, no nothing. If I don't have the money, I shouldn't be able to spend, plain and simple.
They REFUSED. They said it was in their bank policy, it was automatically tied in and they couldn't take it off. I left, taking my money with me, and went to another bank. One that wasn't so inflexible. So much for them.
I am incredibly happy to see that the government is FINALLY taking on their responsibility of regulating these venal institutions that run roughshod over their own customers. Time for the gravy train to pull into the station, folks. If you can't make your money honestly, then TO HELL WITH YOU.
There's always free cheddar in the mousetrap, baby. - Tom Waits
Pardon me for being intrusive, but would you mind telling me what bank you found that agreed to do this? I've sought the same service for some time and have never found a bank that would agree to it.
a few years ago and included a couple of bum checks from customers. I thought i had closed the accounts and made no deposits, only to find to my horror that they had charged and charged on top of charges and on top of those charges, for overdrafts that either I knew nothing about, checks I assumed would have never been cashed (as the account I thought was inactive). I still have a debt of nearly 2 grand to BofA and most of it is their overdraft fees.
Also, they held my larger customer's checks for as long as TWO WEEKS! Some with payments as high as 40,000 and long after the funds were removed from the debited account. It was unbelievable and in my mind borders on fraud.
Not only did they make money by holding and floating the funds that were rightfully mine, they also have used extortion to get more money out of me and of course they have used the sociological extortion of "see how you can't open an account anywhere? You are nothing without us!"
All that and to say nothing of how their practices have thwarted my honest efforts to run a small business.
Some wingnut that I was working for said to me, "I don't know why you don't vote Republican, Republicans have always had the interests of small business at heart." I just smiled and got back to work.
Yeah, there's so many Republicans thinking of ways to help get me out of this financial/economic tank and get me back in business. Sure.
regarding a $2,000 maintenance contract added to my sales order on a motorcycle.
The merchant had me sign a credit request form (after delivery) for credit to my principle on the loan but never followed through to get the money in my loan account.
So I contested the transaction line item with HSBC and was told that the contract with the maintenance agreement company didn't allow refunds (which in a way was true). I explained to HSBC that the credit form with the merchant should have superseded the contract clause regarding credits/refunds due me. HSBC went on claiming both ignorance about applying the merchant credit which had not happened and knowledge of only the original contract wording that allowed a credit at the discretion of the merchant or bank.
Magically 6 weeks later, a $2K credit adjustment appeared on my loan statement minus a $150 fee for which no calculation is described in the contract for me to see. I don't know who got the 150 as yet but I know what sweat glands went into making that money in the first place.
Overall what had happened was so "off the books" that when I do a payoff on the FJR in about 3 weeks, I'll close my HSBC accounts not out of fear but trepidation. A small amount of real cash will look a lot better than poor customer service on a loan.
I'm sorry for your plight, however you were wrong to have written checks and assumed that they would never be cashed. Those checks are contracts to the person/company you wrote them to. They had every right to cash them.
Now what they could have done was bounced them instead of paid on them. But you wrote checks and just "assumed" they wouldn't be cashed. That's your fault.
I thought I had it bad--I had an account at a Texas bank where I lost my ATM card. The account started at $150 overdrawn (not a problem, my direct deposit payroll check would easily cover). But I couldn't get the replacement ATM card activated without flying to a Texas branch (I was in CA at the time). So the $35/day started piling on, until the balance became over $700 negative. I have no idea what the final amt became before it was closed.
F*ck them. They'll have to get me in court before they get anything other than the original $150 I owe.
"Parachutes are allowed in checked or carry-on baggage, but may not be worn in flight."
---Southwest Airlines
Get it out of the casino, and into a credit union, fast. It will help close them sooner than later.
That back in the day (late 80's) every now and then I'd get my checking account down to the penny and a check I had written would land at my small Mom and Pop bank up the street.
I'd get a call, " We have a check here and unless you make a deposit by 3pm today we'll have to return it...."
I'd get enough to cover it from a friend and run make a deposit.
Those days are...gone.
Maybe capitalism isn't all it's cracked up to be.
Eh, Alice?
"The US has an army of 90,000 soldiers in Afghanistan and is spending $100bn a year, but has still been unable to defeat 20,000-25,000 Taliban who receive no pay at all." - Patrick Cockburn
In the hands of mom and pop, life is ok.
That isn't Capitalism. That is the small entrepreneur.
That has been steadily snuffed out.
It is the investment über alles class, the power of the corporations and the shield against personal responsibility they provide for the head honchos that turn the country into a moral cesspool.
For them, there is nothing but growth and endless profit at all costs.
There is no morality.
---
Ralph Nader here
statusquObama, change you can only pretend in
some say we have evolved from manufacturing/labor to the financial system. this type of strategy /behavior has cascaded into everything. the social engineering model is to instill competition amongst all of us over basically everything. the idiot box has ridiculous competition/reality shows to help create/justify this competition behavior. home builders did it with buyer lotteries for new homes. to me it's above and beyond to create consumerism that feeds on itself.
only some say.
When they all say it - run.
I no longer have a TV connection. Haven't had one for 15 years. Use my TV to watch DVDs. Been SO much happier since that ugly source of fear, paranoia, hyper-competition and LIES LIES LIES has been gone from my life. I even smile at people on the street! Imagine that!
There's always free cheddar in the mousetrap, baby. - Tom Waits
Commensurate with the 'competition' you've described herein above, we have many among us who've been trained to blame and shame those of us who fail to 'play the game' by the corporatists' rules (or, actively choose not to?). rizzo has provided at least two examples of this type of behavior. WHY in the name of all that's good would we need some bozo on the inner tubes telling us when we're at fault in our financial behaviors?!?
Again, banks always, always, always, always, always, always (have I stressed always enough?), ALWAYS get their money.
Always.
Billionaire Fraudster Wins Prison Shitbeating
Reuters | Submitted by: epsas
"R. Allen Stanford, the alleged mastermind of a $7 billion fraud, is back in his jail cell after suffering a mild concussion, broken nose and two black eyes in a prison brawl last week, his lawyer said on Monday... Stanford, 59, was injured in a fight on Thursday with a fellow inmate at the Joe Corley Detention Facility in Conroe, Texas, and was hospitalized over the weekend."
Some stuff you can't make up!
There is justice.
NOBODY 2012
of a local community credit union. I've never had such a problem. If everyone would switch to credit unions, the banks would either go out of business or straighten up. I say put them out of business. Until Americans figure out how to use the economy to their advantage, they are going to get ripped off and our economy is going to stay in the crapper.
Where in the Constitution does it say that Congress can order banks around when it comes to overdraft fees?
What? It's not in there?
Well...obviously Obama is Hitler Jr. and we have already arrived at socialism.
(snark)
Perhaps even more ironically we've also heard calls to reform the health insurance industry...
Ahmo start holding my breath...right now.
We have a working capital loan like many other companies, which fluctuates as the need for cash changes over time. Our banker told us the "feds" are requiring them to take the average amount of this "loan" over the past 24 months and convert this amount into a regular amortized loan.
Of course, this new loan would be at a higher interest rate.
Well, I checked with some other local bankers as well as our accountant and found out there is no such federal requirement. Needless to say, our relationship with this bank, which goes back over 25 years, is now compromised by this lie.
Interest rates are still very low, and in order to take their blood from us turnips, they'll do anything and everything at this point.
machines were the banks answer to reducing costs related to face to face contact with the bank tellers which was according to the banks "too expensive". Now, we pay them money so that we may access our own funds. Like they are doing us a favor.
community banks aren't perfect, but better than the big banks. I'm glad to know CU are good too.
We opened a student account for my daughter. Her first bank account with a big bank back east. whoowee! You can use your ATM card like a credit card. I thought that meant you can use it to make a purchase you might need a credit card for like ordering something online. But no! It was exactly what was described above. overdraft overdraft overdraft - with no notice, so she kept overdrawing because it was all within the first month of her having the account. For $5 and $10 amounts. Her bank fees were more than triple the actual overdrafts.
Yes, she needed to learn how to use her register etc. But one would think the hard lesson would come with a rejection of any charges saying You Are Out of Money. But no, it's come into my parlor said the spider to the fly. In fact, they did reject the card at a POS finally but only after making the bank around $200 extra dollars they didn't have a month ago. Off a kid's back. Out of her babysitting and carwashing money.
We called the bank who gave us the run around, then we called the community bank officer who opened our account. We got some double talk but he'd "see what he could do" and gave us an 800# to call, like it was magic.
The guy at the 800# was sympathetic and said the same thing happened to him when he was in school. I took him at his word, he was a young guy. He was helpful in that he warned me that the card could still be used for online purchases even after the overdraft feature was removed.
But no one would offer to do ANYTHING until she paid all the charges off the account. Then they might "rebate".
Finally, we wrote a letter to just about everyone and the original bank officer called us to say he could reduce some of the charges and remove the overdraft aspect of the card. Oh, we offer it as a service to our customers.
Yeah, an invitation to go seamlessly into debt is a real service!!!
We wired money from our bank and they charged her to RECEIVE the wire!!! Our community bank does not charge to put our money into our account through any method. What. a. racket.
Sorry for the long post. I had no idea this was going on until it happened to my daughter. Our bank at home is pretty decent.
I was charged $28.00 to have one page faxed to me from a bank. That was about 12 years ago. I wonder what it costs for an e-mail? I dumped all of my personal bank accounts in 1998. Not missing them.
... isn't there to protect your money.
He carries a shotgun to make it easier to steal your money from you.
Supposedly, Wells Fargo is going to start offering an "opt-out" choice to their customers, so that their card will be denied when they go into overdrawn status.
None of the stories I've read about this, however, is able to put an actual date on when this will happen.
Best job in LA ,
tailgunner on a bread truck
every time you throw a little mud , you lose a little ground .
I wish I could understand why anyone would use a bank rather than a credit union. I do not get it.
...we swiched in the early '90s and have been incredibly pleased. They are cooperative and offer the best rates and service. When we buy a new car, the salesman always drags us in to the finance office and as soon as we mention our credit unions name, we are ushered out. No competition.
"Your lips move but I can't hear what you're saying..."-------Roger Waters, "Comfortably Numb"
BofA tried to charge me a late fee for paying them EARLY this past month. True story. I moved and, in anticipation of not having Internet access, I made a huge payment on my account ($800 when my payment requirement was $35). The next billing cycle, I was charged almost $40 late fee and my introductory interest rate was jacked because my payment got to them ONE DAY BEFORE the "billing cycle" started.
Long story short, I eventually convinced one of the many people I spoke to at BofA that the charge and interest hike was absurd and she reluctantly erased it.
Could you imagine borrowing money from a HUMAN and finding that they charge you MORE for paying them EARLY?!?! Un-fucking-believable!
Beware of anyone promising a future full of yesterdays.
Similar story but not with a bank, but a phone company. I recently took my cell phone to a pay as you go plan, ending it before the next monthly billing cycle was to begin (and even before the payment due date). It was also pay before you use, so my payments were to cover the next month's use. Dear ol' Verizon still insisted I pay the next month coverage, which I had already canceled, or else I would be hit with a late fee. For coverage I no longer able to receive and would obviously not be using. Now of course they'll be happy to refund this payment - eventually; meanwhile they get to use my money for services NOT rendered or even asked for, while I have to wait for their system to give it back.
Sweet.
I once made a CASH deposit on a Monday morning that took 7 days to clear. WTF? Why the hell would cash take so long to post? It's fucking cash! As a result, two checks bounced and I got hit with huge overdraft fees. I called my bank directly for an explanation and they connected me with their automated system. No answer, no explanation, just click . . . Welcome to automated Hell!
This was Regions Bank, by the way.
I don't make a massive amount of money every month, so any fee, no matter how nominal, takes a huge chunk out of my money.
These large banks that are "too big to fail" have gotten away with these practices as a result of the removal of government regulations and the elimination of usury laws. I've been a credit union member since 1986 and wouldn't think of switching to a bank. The question is does this Democratic Administration and Congress have the guts and will to ignore the pressure exerted by the financial industry to impose regulations that go beyond superficial appearance and fix the systemic causes of the problem? My guess is no.
.
I'm closing my account with Sovereign Bank as a direct result of the silliness involving overdraft fees. This was just too much for me to stomach, as it made no legal or logical sense.
About a month ago, I was billed 3 times for the same price in the span of about 5-10 minutes on my debit card number from a local restaurant. It is not clear who was at fault. Rather, it was clear that there was either a glitch or a mistake had been made. This was the day before my paycheck. Thus, the tripple billing sank me into a negative balance that was less than a dollar.
Upon checking my account online on payday, I notice that I was billed $30 for an overdraft fee, which is where I discovered the glitch. So, I call up Sovereign Bank. I inform them of the glitch and ask them to correct it. They tell me that it's obviously a mistake, but that there is nothing they can do about it immediately (which is a load of bull). I am then informed that I can either request they do an investigation, which will take up to at least 10 days, and may not get me my money back, or I can go to the restaurant and have them pay me back what they overcharged, as well as the $30 overdraft fee since it was "their fault."
I was dumbfounded that Sovereign Bank had the nerve to suggest that the local pizza guy owed me $30 to cover their pointless administrative fee. So, I ask to talk to a supervisor. When I get a supervisor on, the same thing is repeated to me. I asked the woman if this was something she and her subservient worker had just come up with, or if it was actually Sovereign Bank's spelled out corporate policy. No answer. She said that since my account was low, and since it was the charges from the restaurant that caused my account to go into an overdraft, it was the restaurant that owed me the $30 fee.
Fed up at this point, I simply tell her that the bank can waive the fee since it is only an arbitrary administrative fee that they charge for profit. She continues to press it. I explain to her that no restaurant is going to believe me if I come in and tell them they owe me $40 to cover a bank's overdraft fee, and then tell them that, as an attorney, I don't know how they'd even be able to make a legal claim to substantiate that. I informed her that I was willing to take them to court on the matter on principle, regardless of how small my loss was, simply so their behavior could be known to the public. Then, she cooperated and my account was returned to normal.
I'm sure Sovereign Bank was hoping that, after my threat, their immediate compliance would be something that would shut me up. But, it really just demonstrated how dishonest and greedy they were being both towards me and the restaurant I regularly attend. If you are using Sovereign Bank, keep this story in mind. As soon as my rent check goes out tomorrow, I am closing my account with sovereign Bank as a result of this.
Would hold a direct deposit of mine, clear a check coming in and take it out of my overdraft protection at interest, then clear the direct deposit that was already there in the first place. I went personally to my branch and talked at length with a real person. It took me a good 30 minutes, but I convinced him to reverse the overdraft funds and charges, and pay the vendor I'd written a check to out of my direct deposit funds. He then apologized up and down when I told him that the check came in after midnight of the day when the direct deposit had already been placed in my account. These fuckers will try anything to run it past the customer. Go personally and face them down. They need to know that a) we saved their asses with our tax dollars; and b) it's against the law to pull these stunts and we're now going to hold them accountable!
"By words the mind is winged." - Aristophanes
This is not as far fetched as some would believe they just don't do it on checks they also do it on credit card deposits. Here is what happened to me, I own a home based business and most of my clients pay there invoices by credit card. Well last month I did really well and I should have had a good deal of money left over for the lean times but no my bank were sitting on credit card deposits into my account in some cases 9 days instead of the standard 3 days. Since there website for the week kept saying it was down and so was there call in system too I wrongly assumed that the money was hitting my account with no problems. Needless to say by the end of the month my $3000 that I had in my overdraft account was eaten away and now my former bank is coming after me for additional bank fees for about $900.00 additionally they threatened to turn my name into the DA's office for writing bad checks which I guess technically I did but in my defense I have always paid bills and written checks two business days after I did my credit card transactions. I know allot of people are going to say use your check register well I do. Allot of people are going to say you should have waited till it cleared which 99% of the time it takes 3 days (Visa MC and Discover take 3 Amex can take up to 5 business days) to clear which would have been no problem if the banks computers and call in system weren't both "down for technical reasons". I have moved my account to a different bank but if this shit keeps up like this I think I will start using my brokerage account like a checking account. So be very careful out there because banks will rob you wherever and whenever they can.
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