4 ms·

It a uniquely American stupidity that somehow everyone just lives with. The concept of overdraft doesn’t even exist in normal consumer accounts anywhere else i

It a uniquely American stupidity that somehow everyone just lives with. The concept of overdraft doesn’t even exist in normal consumer accounts anywhere else in the world. The first thing I do when I open an account here is to disable overdraft - but then you have to pay return cheque charges by whoever was trying to charge your account.

throwaway8689 5y ago
We have exactly this concept in normal consumer accounts in the UK. It is not uniquely American.
jlmorton 5y ago
The history is that people used to write paper checks, and merchants would charge a bounced check fee. Overdraft _protection_ was actually a banking feature which would save you from the cost and embarrassment of a bounced check. There is very nearly zero usefulness to overdraft protection in a real-time authorization world. Nobody charges a fee for a rejected debit authorization. I suppose merchants might charge a return check fee for a failed ACH payment, but nobody uses ACH payments for anything routine in the US.
- JoBrad 5y ago
  Consumers don’t use ACH for very much. Businesses utilize ACH a lot, because despite the additional time lag, it’s free.
- kgermino 5y ago
  > nobody uses ACH payments for anything routine in the US. Water bill, electric bill, mortgage, and property taxes are all ACH for me. Many people pay rent that way. I don’t think it’s commonly used for day to day interactions but a lot of payments are still ACH
- rootusrootus 5y ago
  The latest thing I've noticed is that if you attempt to debit, say, $100 from an account that has only $95, it will successfully debit $95 and then the POS equipment will show that you still need to find some other way to pay the remaining balance. Used to be in this situation it would just be rejected outright. It's more handy for gas pumps, but less transparent. It stops before your tank is completely filled, but doesn't say why. You can hear the difference if you are standing there while it fills, of course, but other than that you may be confused why it slowed down and stopped exactly at a certain amount and won't go any farther.
jon-wood 5y ago
Overdrafts are very much a thing in the UK, most accounts allow it, but you have to request it in advance. In effect they work like a pre-approved loan, which at least when I was working badly paid jobs and needed food right up before payday was a very welcome feature.
- another-dave 5y ago
  With both HSBC and RBS if I didn't have an overdraft in advance they just hit me with an even larger "unapproved overdraft fee" — both refused to disable overdrafts & just bounce the payment instead
t0mas88 5y ago
Netherlands has overdraft if you request it, otherwise the payment would fail / card declined. But we don't have overdraft fees, that's the weird American thing that caused all those crazy optimizations like reordering transactions. The way it works in NL is you pay a (high like a creditcard) interest rate for every day the account is below zero. The transaction order doesn't matter it looks at the balance at the end of the day and charges you 1/365th of 13% interest. The only way banks fuck you over in this system is with the dates. Using a card means a transaction date of "today", getting paid almost always has transaction date tomorrow. So you end up paying 1 day of interest. Much less than a $ 40 overdraft fee and regardless of the number of transactions.

throwaway8689 5y ago

We have exactly this concept in normal consumer accounts in the UK. It is not uniquely American.

jlmorton 5y ago

The history is that people used to write paper checks, and merchants would charge a bounced check fee. Overdraft _protection_ was actually a banking feature which would save you from the cost and embarrassment of a bounced check. There is very nearly zero usefulness to overdraft protection in a real-time authorization world. Nobody charges a fee for a rejected debit authorization. I suppose merchants might charge a return check fee for a failed ACH payment, but nobody uses ACH payments for anything routine in the US.

JoBrad 5y ago
Consumers don’t use ACH for very much. Businesses utilize ACH a lot, because despite the additional time lag, it’s free.
kgermino 5y ago
> nobody uses ACH payments for anything routine in the US. Water bill, electric bill, mortgage, and property taxes are all ACH for me. Many people pay rent that way. I don’t think it’s commonly used for day to day interactions but a lot of payments are still ACH
rootusrootus 5y ago
The latest thing I've noticed is that if you attempt to debit, say, $100 from an account that has only $95, it will successfully debit $95 and then the POS equipment will show that you still need to find some other way to pay the remaining balance. Used to be in this situation it would just be rejected outright. It's more handy for gas pumps, but less transparent. It stops before your tank is completely filled, but doesn't say why. You can hear the difference if you are standing there while it fills, of course, but other than that you may be confused why it slowed down and stopped exactly at a certain amount and won't go any farther.

jon-wood 5y ago

Overdrafts are very much a thing in the UK, most accounts allow it, but you have to request it in advance. In effect they work like a pre-approved loan, which at least when I was working badly paid jobs and needed food right up before payday was a very welcome feature.

another-dave 5y ago
With both HSBC and RBS if I didn't have an overdraft in advance they just hit me with an even larger "unapproved overdraft fee" — both refused to disable overdrafts & just bounce the payment instead

t0mas88 5y ago

Netherlands has overdraft if you request it, otherwise the payment would fail / card declined. But we don't have overdraft fees, that's the weird American thing that caused all those crazy optimizations like reordering transactions. The way it works in NL is you pay a (high like a creditcard) interest rate for every day the account is below zero. The transaction order doesn't matter it looks at the balance at the end of the day and charges you 1/365th of 13% interest. The only way banks fuck you over in this system is with the dates. Using a card means a transaction date of "today", getting paid almost always has transaction date tomorrow. So you end up paying 1 day of interest. Much less than a $ 40 overdraft fee and regardless of the number of transactions.