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Can I ask why no over-draw fee is a GOOD thing?
First of all, the over-draw fee has not been eliminated. What has been added is the ability to opt out of automatic overdraft services on your debit card. This means when you open a bank account, you get asked this question: when you don't have enough money, shall we pay your transactions on this card or deny them? Before, they simply assumed you wanted your card transactions approved even if it was going to put you in the hole the amount of the charge plus a fee or possibly several fees depending on how many transactions overdraw you--or what order the transactions post in. It is a good thing because there is no cap on the number of fees a bank can charge you in the day, and many banks design their posting order to maximize the number of overdraft fees they can charge you. What this means is that perfect people who never make a mistake have nothing to fear, but an elderly woman who lives off of social security and makes a mistake of even five dollars can wind up paying a $35 overdraft fee because of that. If two $2 transactions overdraw her, she will pay two fees. If she cannot pay until her next social security check comes in, she may even pay a fee every 5-7 days while she waits for that check to come in. Many mistakenly believe debit cards will automatically decline when funds aren't available. That is not the case. It is now, though, unless you specifically opt in to that feature.
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Isn't it supposed to be a deterrant to stop you from going over your account balance so that you remember not to get into debt and handle your money better?
That's the reason banks give for it, but fees--overdraft fees specifically--bring in a significant amount of profit for banks. Roughly 30% of profit comes from fees, and banks will lose some of that fee profit because of these changes.
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Why would a I trade 120 dollars a year for that if I already know how to balance my check book?
What does that have to do with a debit card thief being able to spend not only the balance of a customer's account, but also to take that account deeply into debt? What does that have to do with clients who receive fees due to posting order, check holds, etc? Do you know what a chargeback is? It's when someone writes a check to you, you deposit it into your account, and the check doesn't pay, so the bank takes that money back. If this causes your transactions to be returned with the applicable return charge or to overdraw your account, tough. You can pay us back for the transactions, plus a fee for each transaction, plus the chargeback fee. Chargebacks may happen due to stop payments, invalid checks, insufficient funds, and other reasons. Many times when I encounter a chargeback, it was a check from the client's employer. Did you know that at some banks, when items are about to be returned unpaid, a hold is placed on those funds? These holds may make the available balance show negative, cause other transactions to decline for insufficient funds that SHOULD be available, and even cause OD fees & more returned items with return charges from the bank AND the companies who didn't get paid. And guess what.. it's not bank error, so you're paying. If you think that only people who can't balance their checkbook receive overdraft fees, you're wrong.
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And who uses check books anymore anyway?
Do you want an honest answer? Old people, for the most part. But many people still use checks to pay their bills, especially rent.
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That doesn't see like a good deal to me, to be honest, but maybe I am missing something.
Seeing that you seem to think Reg E means "no overdraw fee," yes, you probably are missing something. See the above explanation of why it isn't just people who can't manage money who wind up with overdraft fees.
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I'll take free checking and a calculator please and give me back the 120 bucks.
Free checking is not worth allowing people to overdraft their account with a card most people believe will automatically decline when funds are insufficient, because the banks don't bother to tell them upfront that it won't. Now banks have to do that and give them the option to turn that feature off; before, banks could even refuse to turn the feature off. Anyone, even you, can make a financial mistake, either through mathematical error, human error, or an unexpected banking situation such as a hold or chargeback. Luckily, there are still financial institutions that offer free checking, and many have made their OD-policies more customer-friendly. If the check my employer gives me charges back, I'd sure like to have my debit card STOP approving transactions rather than keep letting me spend money that I don't know isn't there anymore because I haven't received the chargeback notification letter yet and the banks don't typically call.
Savings accounts, by federal law, are limited to 6 electronic transactions in a month. This includes debit card purchases. Many banks do not allow debit cards to be funded primarily by savings because of this; they generally allow debit cards to access the account only at an ATM. If you are using your savings accounts to pay bills, you are fine if you have more than one savings account to juggle or less than six bills to pay a month. Starting with and after the 7th electronic transaction, your bank is required to start charging you a fee for each additional one.
Company policy requires me to state that these views are my own and do not reflect the views of my employer. [The explanations regarding Reg E change are fact, not opinion, though.]
Amatullah - Some banks have started charging fees, or changed the amounts of their current fees. Others are still operating with no fees at all. The change to your account is simply that, upon account opening, you must decide to opt in or out of overdraft services for everyday ATM & debit card transactions. Basically, when you're trying to withdraw $300 that isn't available for whatever reason, do you want to be given that money and charged the fee or do you want to be told "No way, Jose?" Also... free checking is a lie. Even banks that don't have a maintenance fee charge you fees for other "services" they provide, from using their online banking and automated system to using another bank's ATM machine.
. I could do that in cash, but a check makes it easier. US bills that we still have come out as debits, but some things still require checks - some children's activities for example. The thing is, some banks will process point of sale debit transactions even if you don't have the money in your account (and they know you don't) and then charge you overdraft/bounced check fees. And of course they process all the transactions in order from largest to smallest, so "bouncing" one transaction will then bounce a bunch more, regardless of the order you actually made the transactions. It's a great racket.
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