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I don't quite see how an overdraft fee (one of the examples given) is a junk fee - it costs the bank real money to cover the loan they are effectively giving yo
by beachy 3y ago
I don't quite see how an overdraft fee (one of the examples given) is a junk fee - it costs the bank real money to cover the loan they are effectively giving you when you are in overdraft.
- wolpoli 3y agoThat would be covered by the interest charged on the overdraft.
- initplus 3y agoIn the recent past, US banks were found to have specifically designed software to calculate how to best re-order customer transactions to maximise overdraft fees. Banks also generally make it hard/impossible to opt out of overdraft, something that would probably be preferable to many customers. Overdraft fees are a huge source of income these days.
- KennyBlanken 3y agoAdding further: many banks make it difficult or impossible to opt out of overdraft programs. I had to have a huge argument with my local rep. She kept insisting "what if there isn't enough money to cover the transaction?" and did not seem to understand that it was perfectly acceptable to me for such a transaction to fail, rather than succeed and incur a substantial fee.
- hobs 3y agoTo anyone reading this, you often need to write a letter to the bank. I was quite irritated at the time and made the bank manager give me a piece of paper which he then accepted as a "letter". Don't get me started on the level of irritated you need to get a bank manager to void protocol, lol.
- webninja 3y agoYes, especially at the big banks. Either they became big by making more money charging fees or they stopped caring about their customers because they’re too big to care. Smaller online banks & credit unions typically don’t have any fees now.
- switch007 3y agoShe very likely understood but was just under immense pressure from her boss. The same play dumb routine was very common here in the UK too. They made a ton of money on overdraft fees until 2020 when the law banned the outrageous fees.
- hot_gril 3y agoYeah it's annoying, but that still doesn't make it a hidden fee. They tell you upfront, and your "opt out" is to not overdraft your account.
- tadfisher 3y agoBanks in the US must provide a way to opt out of the overdraft "service", after which they will simply decline transactions instead of overdrafting the account and charging for the privilege.
- hot_gril 3y agoI agree fully. It's just not a junk fee similar to the hotel ones.
- jjeaff 3y agoyou don't see how going to the bank during work hours to get an overdraft charge would be difficult for a lower income person? I'm going to guess you live in the suburbs for one and that you have a vehicle and a flexible, white collar work schedule.
- hot_gril 3y agoDid you reply to the correct person? But yes I have three cars and a flexible work schedule, as well as premium bank support.
- WalterBright 3y agoWhen they'd do the reordering to me, I'd go visit the bank manager and point out how many years I'd been a loyal customer. Then she'd fix it.
- j-bos 3y agoThat's great, and sad that such a thing would be necessary.
- WalterBright 3y agoPointing out that you're a loyal customer often fixes problems. (And being nice about it.) It works a lot better than complaining on the internet!
- j-bos 3y agoTrue, maybe loyal pleas would echo up better.
- t-writescode 3y agoCool story. How does that help the hundreds of thousands of very poor people who are trying very hard to pinch pennies in dire straights?
- WalterBright 3y agoIs there something preventing them from visiting the bank manager? Or are you implying that being poor means the bank should cover the overdraft?
- janalsncm 3y ago> Is there something preventing them from visiting the bank manager? Yes. Time. Poor people don’t have time to argue with every company that nickel and dimes them. Most people are working during bank hours. They’re working multiple jobs so they can keep the lights on. A $35 overdraft fee hurts but it’s not enough to sacrifice a shift where you are guaranteed to make $70 for the possibility of getting $35 back (which is by no means guaranteed since they signed a contract that says the bank can take $35 from them). $35 is a very strategic number, isn’t it? It’s just enough to maximize profits but not quite enough to get most people to navigate customer service, which is likely going to go nowhere.
- stuckkeys 3y agoCost the bank real money? lol What planet are you from? Banks don’t use their money.
- fshbbdssbbgdd 3y agoIf a bank covers an overdraft, then the customer doesn’t have the money to pay it back, where does the money come from? Whose balance sheet if not the bank’s?
- stuckkeys 3y agoNot their money that is for sure haha
- astrange 3y agoIt certainly does come from their money. When a bank goes bust, all the owners of the bank also go bust. The FDIC doesn't protect /them/.
- ajkjk 3y agoThat is already how it works. The fee doesn't change their ability to get money back whatsoever. The fee just punishes the person who screwed up more than they're already punished by being broke.
- 3y ago
- not2b 3y agoI don't think it applies to overdraft fees despite what that article says. They are talking about advertising a price, and whoops, you find out that there are lots of extra fees when you go to pay. Would have to track down the actual law.
- tansan 3y agoHow about just rejecting the withdrawal instead of overdrafting?
- hot_gril 3y agoThe first time I opened a bank account, I was thinking, "The banker has been telling me about overdraft for 15 minutes straight, and I still have no idea why this is a thing." So bizarre. I asked at the end, can I just turn this off, answer was no.
- mikepurvis 3y agoAt Tangerine in Canada, it was both— they denied the transaction and hit me with a fee.
- anticensor 3y agoA fee for doing nothing? That is illegal.
- refurb 3y agoYou can set it up that way, I do.
- yieldcrv 3y ago> But they share a commonality in that they "far exceed the marginal cost of the service they purport to cover," according to the Consumer Financial Protection Bureau (CFPB)
- KptMarchewa 3y agoTreat it as a loan and make it cost a real, low double-digit APR instead of fixed fees.
- deleted 3y ago[deleted]
- janalsncm 3y agoIf it was a loan the fee amount would never exceed the overdraft amount. But the fee is usually huge compared to the amount the bank is covering. No one should be taking a loan out at those terms. For example, if you overdraft by $1 you could be charged $35 as a cost of this “loan”. No one should take out a loan at 3500% interest. You’d get a better rate at a payday lender. Since this “loan” amount is not related to the cost of the service I’d call it a junk fee.
- mikepurvis 3y agoI dunno, it's pretty slimy to me if I go $3 into overdraft and then the bank denies that transaction and instead hits me with a $30 fee. Now I'm $30 in the hole and I didn't even get my cellphone bill paid, just a fee for the privilege of having tried to do it.
- jjeaff 3y agoor even slimier, prior to the federal credit protection act, you could have $0 in the bank, then deposit $10, then later in the day, make 10 transactions of $1 each. and they would rearrange the transactions, putting the deposit in at the end of the day and the charges right when they happened, and charge you TEN separate overdraft charges for those 10 transactions at $35 each. then, your balance at the end of the day would be -$340. after which they would charge you an additional overdraft fee that day and every day following for a negative balance penalty. and then maybe an additional charge every once and a while for "extended negative balance" as well as charge you a monthly fee since you don't qualify for free checking that month since you have a negative balance. AND the checking account fees would also create an overdraft charge. it was such an awful racket that was only allowed to go on as long as it did because it mostly just affected poor people.
- mikepurvis 3y agoImagine being the engineer who implemented that reordering logic. How would your even sleep at night having built a thing that so obviously existed solely to prey on the vulnerable.