Originally Posted by moonfirefaery
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.
Okay. That makes sense. I genuinely have not lived in a country for over ten years where one CAN overdraw their account without a credit line (which comes with a hefty interest rate), and I have not held a paper check in my hand is as long. Everything is done by automatic deposit and withdrawl and I get notifications of my balance and withdrawls for every transaction on my cellphone. I just assumed the US had moved along those lines too. I know exactly what my balance is at all times. If I need more money at the end of the month I have to borrow from a friend, which sometimes means eating nothing but creative combinations of eggs and potatoes for a week or two, or borrow on a line of credit from the local kisko (interest free). The cards here will automatically decline your transaction. Sometimes they even decline your transaction when you DO have money because the computers are down and they can't verify your balance.
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.
I always thought of it like a library fee when I lived in the states. It seemed fair to me. But you make a good case for it being a total wank job.
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.
Debit card theft? Check holds? Charge back? those are different arguments, aren't they? My head stopped being able to wrap itself around that whole stopped check thing a long time ago. when money goes in I get a notice of my balance. If it doesn't go in on pay day, I don't go to work until they pay me.
God the US banking system is like some antiquated dinosaur...honestly...if someone steals my bank card (or holds me up and makes me drain my account ) I am insured...well the BANK is insured and they protect my money. How the heck is it less safe to have your money in a bank in the US than it to have an account in COLOMBIA!!!! OMG! That's funny, no?
I am trying but I do not follow the charge back thing. See, now you got to make me feel utterly stupid about something...I'll take your word that this development is a good thing, but I think I'll keep my money here in Colombia or in my pension fund on the Isle Wight, nevertheless.
Do you want an honest answer? Old people, for the most part. But many people still use checks to pay their bills, especially rent.
I did want any honest answer...these are such a throw back from the past for me. I seriously have not even seen a paper check (apart from in movies, which I always thought was one of those anachronistic flaws like people not having cellphones and it causing all sorts of confusion and delay and comedy) in over ten years. I thought they did away with them. More evidence for me that the banking industry is mostly in control in the States. What a SCAM!
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.
I do not even know what "Reg E" stands for or means. You said no overdraw fee...or so I thought....now I don't know.
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.
Yeah...that's how most of the world does it! I actually cannot think of a single country I have lived in that allows you to spend money you don't have without a credit line that you have to apply for through a lengthy drawn out process that requires a co-signer no matter how rich you are. I cannot even believe that is legal...the US is so messed up when it comes to money. God! (I mean I believe it, but I can't believe it!!! That's horrible!)
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.
That is messed up man!
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 - I pay all my bills (Cable, electric, water, phone) at the supermarket, a bill place, or the pharmacy...most major stores have the equipment to process bills. If I want to pay a person for something (like school activities, donations, or rent) we go to their bank branch and make a deposit in their account, or give them cash. You CAN do these things on line, but I keep losing my password and I can't seem to get it set up, so I gave up.
MD the banks here stay open until 8pm most week days and until 5pm on saturday. In other places I have lived in the world they have at least one day a week opened quite late, and always a Saturday morning at least. People also typically are excused from work for red tape issues without much hassle. Employers KNOW it's part of the deal so if I have to go to the post office I get an afternoon off to do so, or at least a full hour for lunch.