3 ms·
I used an overdraft line of credit once, accidentally. Then I turned it off. The bank salesman had sold it to me as “overdraft protection,” and at the time I di
by Decade 10y ago
I used an overdraft line of credit once, accidentally. Then I turned it off. The bank salesman had sold it to me as “overdraft protection,” and at the time I didn’t know what “overdraft protection” meant, so sure, protection is good, right?
I guess what they’re “protecting” you against is the embarrassment of having a rejected transaction. And then they charge the overdraft fee, and a fee for using credit, and more fees until you notice and fix it. And if you’re overdrawing on a debit card, then you’re probably poor and those fees are a substantial burden.
It’s one of the reasons I decided to close my Chase account.
- gerbilly 10y ago>And if you’re overdrawing on a debit card, then you’re probably poor and those fees are a substantial burden. It's even worse than that. Banks have been caught reordering transactions to maximize overdraft fees.[1] For example, say you have a $100 in you account and you use your debit card to pay the following amounts (in time order): $4, $15, $60, $41. the first 3 will go through, then the last one $41 will put you over the limit and you'll pay one overdraft fee. But if you reorder the transactions and submit them like this: $60, $41, $15, $4, then you go over the limit by the second transaction and pay 3 overdraft fees instead. Nice huh? [1] http://www.nytimes.com/2016/02/29/business/dealbook/overdraft-practices-continue-to-gut-bank-accounts-and-haunt-customers.html http://www.nytimes.com/2016/02/29/business/dealbook/overdraf...
- jjeaff 10y agoI believe this practice is no longer allowed. But of course is still happening.
- captn3m0 10y agoThe article mentions a bank that now notifies customers in fine print about this practice on the basis that "it is good as long as the customers are notified". So definitely still happening. (article from 2016)
- captn3m0 10y agoThe article mentions a bank that now notifies customers in fine print about this practice on the basis that "it is good as long as the customers are notified". So definitely still happening. (article from 2016)
- captn3m0 10y agoWow, this is another reason we need developers to study ethics. No one should have agreed to write software that _reordered_ transactions to maximize fees.
- dalore 10y agoIn the UK (and presumably Australia) you can get an overdraft on your account and you don't get charged a fee. You get charged interest (like around 18%/year) charged only for the days. So it can be used as a buffer against charges, whilst you keep your money in a higher interest rate account.