5 ms·

I only ever ASKED one poor person why they didn't have a bank account. A young mother of a student at a middle school I do work with. She has three kids and one

by bilbo0s 13y ago

I only ever ASKED one poor person why they didn't have a bank account. A young mother of a student at a middle school I do work with. She has three kids and one month she was hit with fees for a) having less than a prescribed amount in her bank account. and b) writing a bad check. (Ironically, a check that was bad because of the fee taken for 'a'). Now for her, going to Walmart every month and putting her earnings on a prepaid card gives her everything she needs with little of the risk. And so that's what she does. It's not a "check cashing place" or "payday loan" place, but it is one of the places siphoning the poor from the banks. (My guess is that it's probably siphoning a lot of them too). I think sometimes it's a little easy to lose sight of that single mother with three kids working a low end job. She really can't afford fees like that... though the fees may sound trivial to the middle class. When she gets home, she HAS to have food for her children. And among a lot of what you might term the "responsible single mothers", anything that would put their ability to do that at risk is, rightfully, eliminated. Bank accounts, in their current form, are on the list of things that can put that at risk. And so, bank accounts are eliminated. After that conversation, it was not clear to me that she had made a bad decision. I couldn't really question her priorities. A bank account was good for me... but maybe not for her. This is why I think that these sorts of decisions will be made more and more often by the poor. Because they only care about the ends, (feeding her kids). Not the means, (the bank account). I guess I'm just saying that... It wasn't clear to me that it was an... "...effing bad decision."

steveklabnik 13y ago
> (Ironically, a check that was bad because of the fee taken for 'a') This is a real big problem in these kinds of situations. To give you an idea of how this happens: when I was in college, I worked at a pizza shop. It was Thursday. I got paid Friday. I thought I had $20 in my bank account, but I didn't realize that day was the day that my World of Warcraft subscription was up, and that was $15. During the course of the day, I bought lunch, a snack, and some pencils or something. All that total was less than the $20, it was something like $10 for lunch, $2 for the snack, and $5 for the pencils. So I was good. I wans't good. They applied the charges like this: Starting Balance: $20 WoW: -$15 --------------------- $ 5 Lunch: $10 --------------------- -$ 5 Overdraft fee: -$35 --------------------- -$40 Snack: -$ 2 --------------------- -$42 Overdraft fee: -$35 --------------------- -$77 Pencils: -$ 5 --------------------- -$82 Overdraft fee: -$35 --------------------- End total: -$117 Now, what sucks is that if they had processed them in a different order, it would have looked like this: Starting Balance: $20 Lunch: $10 --------------------- $10 Snack: -$ 2 --------------------- $ 8 Pencils: -$ 5 --------------------- $ 3 WoW: -$15 --------------------- -$12 Overdraft fee: -$35 --------------------- End total: -$47 Still an expensive mistake on my part, but it's more subtle than 'made a bad choice.' I was able to convince the bank to refund two of the fees so I was only out $40, but that extra $70 was a _massive_ amount of money to me at the time. It basically meant that I could only exactly squeak by for the next month, since that was basically all of my discretionary income. You can construct a similar situation which would have forced me to then take out a payday loan to make my bills, had I made one or two more mistakes in that same timeframe.
- romaniv 13y ago
  Did you know that this kind of reordering was intentional in some banks? http://consumerist.com/2011/11/10/bofa-scraps-plan-to-let-customers-opt-in-to-overdraft-fees/ http://consumerist.com/2011/11/10/bofa-scraps-plan-to-let-cu...
- jakejake 13y ago
  It's called transaction re-ordering. The bank claims the that large transactions (like rent, mortgage, etc) are likely to be the most important and that you, the customer, would want those to be processed first. But, the math works out in favor of the bank because you get more fees (exactly as you showed in your example). I remember this being in the news several years ago. I don't remember if anything came of it, maybe somebody else here does. But, personally I did opt out of all overdraft services from my bank - so if I did run out of money my charge would simply be denied. As far as I know this never results in any penalty. Any automated billing I have set up seems to be fault-tolerant and will just notify me to verify my card information and re-try the charge a few days later.
  - kekumu 13y ago
    IIRC Bank of America lost a class-action lawsuit over this practice. I didn't opt-in to overdraft protection precisely because of stuff like this. I'd rather just be denied. I got hit with several overdrafts after some tickets I purchased finally got charged a month after I purchased them. Even better was that I never got any text messages to warn me. I set up alerts for low balances and whatnot, and somehow this was the one day it failed to work. If it had, I would have transferred money from another account and avoided any problems. I've been meaning to find a new bank (or credit union) since.
- kyllo 13y ago
  I just got a letter in the mail telling me that I'm a beneficiary of a successful class action lawsuit against my bank for doing this.
- dobbsbob 13y ago
  When I was a student I was broke, and lived off a tiny income of $800 a month for food. I bought a 3G mobile stick which didn't work, and immediately returned it the next day and cancelled the service. Of course, they never cancelled service so a year later I get collection phonecalls that I owe them $1,000. Regardless of me disputing the bill they instead debited my bank -$1,000 which I had no idea they could do since I didn't have overdraft. What they did was wait until 11:59pm the day before I was to be paid out $800 direct deposit from my pitiful p.t job and the bank allowed it to go through, then charged me interest on the negative balance for those few hours where they overdrafted the account. I woke up to -$280 in my account in overdraft fees and the theft of my money from that telecom. Being that I couldn't feed myself I had to go out and do cash loans at extreme interest and was in a cycle of poverty for 3-4 months after that until finally got my money back from those assholes. I closed my account after that and asked to be paid out in cash from my job instead.
maxerickson 13y ago
She would fit nicely into category 4 though.
superuser2 13y ago
Except those debit cards have all kinds of predatory fees. They're smaller and predictable, but way more expensive than using a checking account from a credit union correctly. For example, PayPal: https://www.paypal-prepaid.com/prepaid-debit-card/paypal_fees_popup.m https://www.paypal-prepaid.com/prepaid-debit-card/paypal_fee...
- Cherian_Abraham 13y ago
  I suspect he/she is referring to Walmart Bluebird. It eats bank's profits for breakfast, lunch and dinner.
  - protomyth 13y ago
    MasterCard is also a big player with a lot of outlets (MasterCard Prepaid Everyday Cards).
rmc 13y ago
Because they only care about the ends, (feeding her kids). Not the means, (the bank account). I don't like this ends/means thing here. I mean bank accounts aren't 'ethical things'. Not having a bank account isn't 'unethical'. In the context of money people only see accounts as an ends. Very few people have a bank account "just because".
ncarroll 13y ago
I must have missed something. I didn't read what patio11 wrote to suggest that he thought paying with cash (or it's equivalent) would be a bad decision. It seems to me like your friend made a sane and responsible choice when she ditched the bank. Really, if asked, I don't know anyone struggling financially who has a line-item in their budget to cover not having money. Maybe overdrafts should be capped and charged the going annual interest rate for short-term loans. If I understand correctly, that is how they are handled in Germany.
gcb1 13y ago
have an uncle who is a bank dev since forever... he says when he started banks had a "cost per client" that they had to make up for lending/investing that clients money. nowadays they have only consideration for "profit per account". and he says thats because banks are now almost required if you want to get paid for your job, so you dont have to give anything for free anymore.

by bilbo0s 13y ago

steveklabnik 13y ago

> (Ironically, a check that was bad because of the fee taken for 'a') This is a real big problem in these kinds of situations. To give you an idea of how this happens: when I was in college, I worked at a pizza shop. It was Thursday. I got paid Friday. I thought I had $20 in my bank account, but I didn't realize that day was the day that my World of Warcraft subscription was up, and that was $15. During the course of the day, I bought lunch, a snack, and some pencils or something. All that total was less than the $20, it was something like $10 for lunch, $2 for the snack, and $5 for the pencils. So I was good. I wans't good. They applied the charges like this: Starting Balance: $20 WoW: -$15 --------------------- $ 5 Lunch: $10 --------------------- -$ 5 Overdraft fee: -$35 --------------------- -$40 Snack: -$ 2 --------------------- -$42 Overdraft fee: -$35 --------------------- -$77 Pencils: -$ 5 --------------------- -$82 Overdraft fee: -$35 --------------------- End total: -$117 Now, what sucks is that if they had processed them in a different order, it would have looked like this: Starting Balance: $20 Lunch: $10 --------------------- $10 Snack: -$ 2 --------------------- $ 8 Pencils: -$ 5 --------------------- $ 3 WoW: -$15 --------------------- -$12 Overdraft fee: -$35 --------------------- End total: -$47 Still an expensive mistake on my part, but it's more subtle than 'made a bad choice.' I was able to convince the bank to refund two of the fees so I was only out $40, but that extra $70 was a _massive_ amount of money to me at the time. It basically meant that I could only exactly squeak by for the next month, since that was basically all of my discretionary income. You can construct a similar situation which would have forced me to then take out a payday loan to make my bills, had I made one or two more mistakes in that same timeframe.

romaniv 13y ago
Did you know that this kind of reordering was intentional in some banks? http://consumerist.com/2011/11/10/bofa-scraps-plan-to-let-customers-opt-in-to-overdraft-fees/ http://consumerist.com/2011/11/10/bofa-scraps-plan-to-let-cu...
jakejake 13y ago
It's called transaction re-ordering. The bank claims the that large transactions (like rent, mortgage, etc) are likely to be the most important and that you, the customer, would want those to be processed first. But, the math works out in favor of the bank because you get more fees (exactly as you showed in your example). I remember this being in the news several years ago. I don't remember if anything came of it, maybe somebody else here does. But, personally I did opt out of all overdraft services from my bank - so if I did run out of money my charge would simply be denied. As far as I know this never results in any penalty. Any automated billing I have set up seems to be fault-tolerant and will just notify me to verify my card information and re-try the charge a few days later.
- kekumu 13y ago
  IIRC Bank of America lost a class-action lawsuit over this practice. I didn't opt-in to overdraft protection precisely because of stuff like this. I'd rather just be denied. I got hit with several overdrafts after some tickets I purchased finally got charged a month after I purchased them. Even better was that I never got any text messages to warn me. I set up alerts for low balances and whatnot, and somehow this was the one day it failed to work. If it had, I would have transferred money from another account and avoided any problems. I've been meaning to find a new bank (or credit union) since.
kyllo 13y ago
I just got a letter in the mail telling me that I'm a beneficiary of a successful class action lawsuit against my bank for doing this.
dobbsbob 13y ago
When I was a student I was broke, and lived off a tiny income of $800 a month for food. I bought a 3G mobile stick which didn't work, and immediately returned it the next day and cancelled the service. Of course, they never cancelled service so a year later I get collection phonecalls that I owe them $1,000. Regardless of me disputing the bill they instead debited my bank -$1,000 which I had no idea they could do since I didn't have overdraft. What they did was wait until 11:59pm the day before I was to be paid out $800 direct deposit from my pitiful p.t job and the bank allowed it to go through, then charged me interest on the negative balance for those few hours where they overdrafted the account. I woke up to -$280 in my account in overdraft fees and the theft of my money from that telecom. Being that I couldn't feed myself I had to go out and do cash loans at extreme interest and was in a cycle of poverty for 3-4 months after that until finally got my money back from those assholes. I closed my account after that and asked to be paid out in cash from my job instead.

maxerickson 13y ago

She would fit nicely into category 4 though.

superuser2 13y ago

Except those debit cards have all kinds of predatory fees. They're smaller and predictable, but way more expensive than using a checking account from a credit union correctly. For example, PayPal: https://www.paypal-prepaid.com/prepaid-debit-card/paypal_fees_popup.m https://www.paypal-prepaid.com/prepaid-debit-card/paypal_fee...

Cherian_Abraham 13y ago
I suspect he/she is referring to Walmart Bluebird. It eats bank's profits for breakfast, lunch and dinner.
- protomyth 13y ago
  MasterCard is also a big player with a lot of outlets (MasterCard Prepaid Everyday Cards).

rmc 13y ago

Because they only care about the ends, (feeding her kids). Not the means, (the bank account). I don't like this ends/means thing here. I mean bank accounts aren't 'ethical things'. Not having a bank account isn't 'unethical'. In the context of money people only see accounts as an ends. Very few people have a bank account "just because".

ncarroll 13y ago

I must have missed something. I didn't read what patio11 wrote to suggest that he thought paying with cash (or it's equivalent) would be a bad decision. It seems to me like your friend made a sane and responsible choice when she ditched the bank. Really, if asked, I don't know anyone struggling financially who has a line-item in their budget to cover not having money. Maybe overdrafts should be capped and charged the going annual interest rate for short-term loans. If I understand correctly, that is how they are handled in Germany.

gcb1 13y ago

have an uncle who is a bank dev since forever... he says when he started banks had a "cost per client" that they had to make up for lending/investing that clients money. nowadays they have only consideration for "profit per account". and he says thats because banks are now almost required if you want to get paid for your job, so you dont have to give anything for free anymore.