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This guy complains about overdraft fees. Isn't the simple solution not to overdraft? Almost any bank has online access to your account, and ATM/Debit transact
by derekp7 13y ago
This guy complains about overdraft fees. Isn't the simple solution not to overdraft? Almost any bank has online access to your account, and ATM/Debit transactions seem to show up immediately. If you are getting toward the end of your pay cycle, make a daily check of your balance. Have a habit of mentally subtracting some fixed amount (say, 1,000) from your balance whenever you look at it, so you always have a cushion too. BTW, when you have a bank turn off overdraft privileges, that applies to your debit card only (i.e., instead of letting a transaction go through it will get denied at the terminal). But any check or automatic withdraw will still generate an overdraft fee.
If you need something a bit simpler, set up two accounts -- one for recurring bills, a second one just for your debit card. Have your paycheck split accordingly between the two accounts (or set up an bi-weekly transfer to coincide with your paycheck deposits). Any utility bills, mortgage / rent payment, etc comes out of the bills account. Then you never miss an important bill payment. Bonus -- to make this work, you need a bit more going into the bills account than what goes out. At the end of the year, you will then have a surprise savings balance sitting there.
- thefreeman 13y agoMan, no offense, but you sound like someone who has never worked paycheck to paycheck. I'm not endorsing his banking scheme, but I can sympathize with the shityt overdraft fees are. Also "seem to come in order" is not really good enough when you are down to 5 or 10 dollars left. Also, I have seen many examples of banks processing things out of order to maximize the overdraft fees. Ie. processing larger transactions before smaller ones that occured before them chronologically, so that a number of 4 or 5 dollar purchases would end up each having a $35 overdraft fee. For 95% of situations it would be much more in the customers interest to just reject the transactions. But the banks make a killing off of exploiting the people who can least afford it (those with almost no money in their account). edit: downvotes? Anyone care to actually tell me what is downvote worthy in this post? The guy's recommendation to "subtract 1000" from whatever your balance is is totally infeasible for a large portion of the population.
- ajcarpy2005 13y agoShouldn't this be an illegal banking practice?
- thefreeman 13y agoI don't know if it's legal or not but I've never seen any guarantee that transactions will be processed in the order they are made. And the people who it happens to aren't the type of people who can afford an attorney anyway.
- dllthomas 13y agoHistorically it was legal; I want to say it was banned a couple years back, but I'm not confident about that.
- BigTuna 13y agoIt wasn't banned and it is still quite legal. Overdraft fees are banks' bread and butter. They continue to process withdrawals before deposits and many process them in the order that maximizes overdrafts. http://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-banks-are-reordering-your-transactions-and-charging-overdraft-fees/ http://www.forbes.com/sites/halahtouryalai/2013/06/11/yes-ba...
- thefreeman 13y agoWow, thanks for that link. In 2012, banks took in $32 billion in overdraft fees up $400 million from the previous year. The record was hit in 2009 with $37 billion in overdraft fees collected by banks.
- hopefulwebdev 13y agoLuckily there are some new kids on the block that (say they) won't ever rent-seek with fees. https://www.simple.com/ https://www.simple.com/ is one I know of.
- deleted 13y ago
- anigbrowl 13y agoBonus -- to make this work, you need a bit more going into the bills account than what goes out. Easier said than done. Working in a mall he's probably not making top $. Theoretically you can have your bank decline a transaction rather than charging you an overdraft fee, but in practice they often ignore such requests, claiming that they're trying to save their customers from embarrassment, though I think most people would rather be slightly embarrassed than pay a $35 fee. Overdraft fees used to be quite low, like 45 or $10 so if you did it occasionally it wouldn't be a big deal, but after the financial crisis most banks jacked them up substantially.
- mertd 13y agoWhat is the difference between this guy's scheme and not using the debit card for purposes other than withdrawing cash at ATMs ever? As an added bonus, your cash at the bank stays as cash theoretically forever rather than converting itself into a video game.