I'm betting what you're describing is what happened. The overdraft transactions took forever to post, and then the bank probably set them in a neat, fee-creating line from largest amount to smallest and called it a day.

...I'm so tempted to take my money to a new bank. I need to make a list of all the automatic transfers I need to change, though.

Either way, I think taking $125 in fees is a bit overboard for $5 in overdrafts.

@RWB: Actually the opposite of what you said.

I don't have ANY problems with my bank, and I never asked for, or received any hand out from the government. YOU, on the other hand, work for a bank. Possibly contributing to said policies. You can claim nonsense up and down, but, how can anyone believe you, YOU'RE A FUCKING BANKER!

I find it sad that YOU have such little understanding of your power! Not that someone as childish as you would hold a very high position. But yeah, every person counts. You're taking the lazy republicans route and claiming it's the consumers fault for patronizing the banks, and that we deserve to be parted with our money for agreeing to their terms. Well guess what, The terms and plans are misleading, the people are trained in misrepresentation, the rates are robbery, the order of charges is criminal, and the customer service is purposefully inhibiting. And more and more banks are becoming this way by the day. You can switch as much as you want, there are better and worse, but for the most part they're all following each others lead. I have no respect for you sir.

And yeah, I'm done, but seriously. You need to wake up and realize that you're too old. There's a new mindset in america, and it's no longer as simple as letting everyone find out the hard way, and letting the rich fine-print people out of their money. And this website is the god damn epicenter. So take your simpleton dinosaur mindset and fight everyone somewhere else!

3. In my case, and in that of many other people, it's not that I don't have money in the bank -- I have money in my savings account and overdraft protection. The bank charges me something like $20 to do an automatic transfer from my savings account to cover the money that isn't in my checking account. There's no cost to cover for them -- someone wrote about 20-30 lines of code at some point to do that process, and it takes the computer less than 100ms to do it. It's not like years past, when there would have been human intervention involved.

What the fuck is this supposed to mean? More Us vs. Them hatred? Childish.

Dude, you haven't made a single coherent argument. So quit, fine, that's the easy way out. Doesn't require any intelligence, just apathy.

Personally, I find it sad you have so little understanding of the power you have as the consumer. You don't have to beg the bank to do what you want. You don't have to beg the government to fix your problems for you. You can just do it yourself.

1. Almost all local banks have gone under because of offering bad mortgages? No, this is a false statement. I work in banking. Please cite some proof.

2. Banking with a small bank means automatically that I will pay more for services like ATMs? No, this is also a false statement. Many local banks waive ATM fees. And many small banks are very welcoming to new accounts. Again, please cite some proof, some statistics or something.

3. I didn't say anything about "supporting larger banks". No one did. Quit redrawing the lines in this argument. If you leave a larger bank for a smaller one, the larger bank doesn't have any rights over the business you conduct between you and the smaller bank. They may make money off their own services, like providing ATMs usage to smaller banks. But they aren't responsible for the overdraft charge or anything.

4. Patently false. They were given a choice. A choice not to spend the money. A choice to use another bank. You just choose not to see it.

@NeverLetMeDown:

Agreed. I don't understand it all, but what he was trying to tell me two weeks ago is that his job was made especially difficult by the many different bodies that are fighting over how to regulate banks. There are MANY federal and state regulations that are fighting over how to do this right now.

If you couldn't actually check your statements and your bank had this setup would you notice if you overdrafted 2 times a paycheck? Especially if you only had access to your balance so you didn't know that the balance included a $100 loan?

Yes they should have been more attentive but they also didn't know that there was even such a program to have to watch out for it. They saw that they had an available balance so they used their card.

@RWB: why

I'm talking about actually having $20 in your account and going to target and putting $50 on your debit card. Even if your online balance said $50, if you know its probably off a little, why not take cash out of an ATM and pay that way? the ATM won't grant you more money than you've got handy.

I like not having a CC balance, but i like not having bank fees more.

I genuinely hate bank fees (i will go WAY out of my way to find a BoA ATM rather than pay $4), and that $20 really pissed me off, even though I knew it was fair. I made sure it didn't happen ever again, as much as possible. Isn't learning to be responsible with your money part of being an adult?

Though our current overdraft practices aren't that great the press release says we are changing it.

i'm not going to waste my time with you guys. You're the reason our country is so jacked up.

At least our president isn't one of you @#$!s any more.

Some of what is being said is true, if you eliminate overdraft fees the money will have to come from somewhere. That means higher rates or additional fees.

The model right now is broken, there have been too many services added that cost money with no way to recoup the cost directly. Bill payment actually costs the bank money, it is cheaper to process a check than to process a bill payment. With overdrafts there are risks, because many overdraft amounts are not recouped due to people never paying the principal amount back. These end up getting charged off and are a loss.

I'm really split, from a consumer point of view I agree. But working for a financial institution I am also aware of how much loss and cost is involved with the day to day operations. The banking industry is really hard to make money in since there is so much competition.

The big problem is that the "Bad Banks" could not be allowed to fail. There are banks that did not engage in risky behavior yet they are suffering a catch 22 at this point.

Best thing is to join a credit union since as a member you are also an owner and have a voice in voting and running the institution I guess. As long as the business belongs to someone else, what say do you really have?

@RvLeshrac:

Even if you are trying to stick to the absolutely straight and narrow, bank regulations aren't simple. Neither is the tax code. Although, I suppose, if you just send 100% of your income to the IRS, the tax code is simple.

To summarize BoA's position, they're not just screwing the little guy, they're screwing the little guy for you.

@Darren W.:

You already know upfront what the charges are - assuming you read the nicely printed fee schedule that you got when you opened your account.

Annoying..

I made a quick video of it:

I too advocate personal responsibility. However, the banks are getting stupid lately. For instance, just recently HSBC assessed a maintenance fee of $15 dollars to my checking account. Problem here is 1.) This account has never had a fee in the 5 years I've had it, and 2.) because I have a mortgage with HSBC, the minimum combined balance is achieved, and I should have never been charged to begin with, any way you slice it.

So after HSBC hit me with a $15 fee that should have never been charged, they hit me with a $35 overdraft fee because their fee overdrew the account.

So I spent an hour yelling at the mindless CSR over the phone, and they eventually reversed the fees.

The funny part is though, is how they try to use language against us. The CSR told me that the fee reversal would be done as a courtesy, and that it would be the last time they reverse a fee. I replied with "No, if HSBC continues to screw up my accounts, I will continue to call them out on it."

They attempt to turn a negative (them F'ing up) into a positive by calling it a courtesy. That kinda stuff makes me fume.

This propaganda is shameless.

RE: free accounts, I have free accounts with USAA, Navy Federal CU, and US Bank. None required direct deposit or any other minimum. As long as you can opt out of overdraft fees for debit card use, I have no problem with them.

Local banks and credit unions being the best candidates to make this happen.

Makes sense now? :)

@econobiker: "Simply put: the banks no longer process your account in the same way you were taught to record transactions in your check register."

How they order it is irrelevant. If you spend less than you have, no matter how they order it, you will not overdraft. I assure you that were banks to process payments chronologcally, as you suggest, those who chronically overdraft would continue to do so, simply because they spend more than they have (remember the days of "beating the check to the bank").

In your register list all debits, and never list a deposit until it clears. Pretty simple.

@tbax929 is back from the beach:

About 47% of US households pay no federal income tax, and 24% have zero (or negative) net federal taxes even _including_ payroll taxes.

@Moosenogger: That's not accurate. You never had $2 in your account. You in fact had $0 or a little less.

Did you go by online banking or your physical check register. One will lie to you, the other won't.

They still took my money, though.

@RvLeshrac: Profits of publicly held companies are hardly "vacuumed" out of the economy.

I had gotten my account down to $2 (I triple checked it on Saturday! I know it had $2 in there when figuring in all the pending items) and decided not to touch it for the entire week. So, I didn't spend any money until payday (Thursday) and low and behold, the bank said that I had overdrafted 5 times to the tune of $5 (total). They then proceeded to take $125 dollars out of my $150 check in overdraft fees and refused to waive any of them for me.

I even told the person over the phone that I had had $2 in the account on Saturday and hadn't touched it since, so I didn't understand how it could have overdrafted. Of course, by this point, everything in my checking account had been rearranged, so it was impossible to tell if I was lying or not. Honestly, even if one of the businesses had sent in the charge slip late, it still should have shown up on my account as a pending transaction and been factored into my total. I think my bank did something fishy (or messed up completely) and refused to do anything about it.

Thomas Jefferson clearly understood the perils ahead when he noted that "Banking establishments are more dangerous than standing armies".

What this would really do is take interest rates out of the central bank's hands and make it universal. Want that 5 year car note? That rate will be 31.58%. Okay, maybe not that high, but they'd basically peg it at the higher allowable rate. Why? They are taking HUGE risks with their longer term rates (longer term = higher rates to account for inflation, default, etc). They'd need those obscene short-term rates to help hedge their longer-term risks.

@mm16424: Damn, wrong spot.

@BrazDane: "a public relations person sent in the following suggested "follow up" story"

Sad thing is that this type of PR crap ends up being used as an actual "newspaper" story by lazy journalism manufactoring reporters... Probably headlined along the lines of a scare story- "If banks get rid of overdraft fees, the public will pay more for checking accounts!"

Of course! Every single person who overdrafts does so because of a bank error related to their tanning costs.

In all fairness, it's poor money management, and not bank errors like these, that are responsible for the majority of overdrafts. Use a check register.

@tailstoo: We saved them due to political lobbiest and politicians who are in bed with the industry...

Paying $2 cash for a cup of coffee with never, ever result in a $35 overdraft charge. This is a concept my collegiate sons just don't seem to grasp.

@fdamstra: Simply put: the banks no longer process your account in the same way you were taught to record transactions in your check register.

@mm16424: Sure everyone should be responsible but you are pulling the "lack of personal responsibility lets corporations off the hook for doing scummy things to maximize their profits". Years ago the banks processed items in order of presentation not highest to lowest and without using their their bs answer of "processing high value checks to make sure mortgage or rent checks don't bounce". The very fact that banks make it very difficult to opt out allowing of continued debit card transactions on empty accounts (by shutting off the card) should be evidence alone of their intentions.

@TuxthePenguin: Or they'd just require you to make a higher down payment. I hear from a lot of older folks that it used to be considered normal for banks to require at least 20% down on any house or auto loan. Anybody know if that's true?

@Cant_stop_the_rock:
Poor people don't pay taxes??? I'm not poor now, but I was once, and I wish someone had told my employer that I shouldn't have had to pay taxes because I was poor.

@Trai_Dep:
What????

@Cant_stop_the_rock: Damn straight. Why shouldn't the irresponsible subsidize the responsible? It's been the other way around since forever.

Instead of monthly fees, they'll likely just add a check processing fee for each check you write.

@smiling1809: Problem is that you end up paying taxes for the ~irresponsible~ people's mistakes in dealing with corporations - taxes which would have purchased better schools, equipment, etc. Instead these taxes are being funnelled to corporations to make those corporations stronger and encourage more people to make mistakes... (bank bailout as an example)

Take a $100,000 mortage at 5.5%. The nominal value of all interest payments is $115,838.19. But there is inflation and time-value of money, so discounting all those payments at the loan rate, you really only paid $64,340.11 in interest at today's dollar value. That 5.5% is effectively a hurdle rate. If the bank thought it could get a better return than 5.5%, they'd let you prepay as much interest as you'd like.

But lets not get too complicated. Lets go with your idea. Say that the interest rate cannot exceed the price of the item... okay? In closing your mortgage (as above) the bank would make you pay $15,838.19 in extra charges to make up the "lost" interest by having to drop your rate down to ~5.3% to comply with that law.

I guess I should ask, JohnDeere, have you taken a finance class?

It'd be one thing if the bank was fronting the money to pay for my overdraft. They can charge whatever fee they want for that; their money, their rules. But if they're using my money to cover the shortfall, why the hell would I want to pay for that?

@catastrophegirl: Sure the banks used to make money on loans but the ATM fee train made them realize that they could make more-money super-fast on fees, fines, and penalties than slow methodical loans would ever generate.

This is what I term "negative action generated profits" which remove money from economies versus "postive action generated profits" such as loaning money which would stimulate economic growth exponentially. Some people pose similar arguements against lawyers...

@wrjohnston19283: Years ago alot of the checking stuff was processed manually also not digitally so their costs have been reduced significantly with electronic and digital banking information technology.

Same as ATM fees the banks are out to get what they can- remember they said ATMs would reduce costs of employing tellers yet that never affected them putting fees on out of network, etc transactions...nor did it seem to reduce teller count (though it could have kept tell count from increasing...)

EVIL PUPPETS!

It's not that surprising - any interest rate above about 5.3% will do it. The key is, that's over 30 years! It's not like it's all due tomorrow. See TuxThePenguin's comment about the value of money over time above.

This might also help: if your bank loses money in a given year, don't borrow money to give yourselves enormous bonuses.

@Esquire99:

"A tanning salon accidentally charged her daughter Ashley $70 instead of $7. The transaction was immediately voided but Phyllis' account, which is linked to Ashley's, had become overdrawn.

The bank, Intrust Bank, didn't clear the voided transaction for a few days, so her daughter's account remained overdrawn. Her daughter went on to rack up fees on a $2.50 McDonald's Happy Meal and a $3 purchase of school supplies at Wal-Mart.

Total fees: $150 from five different transactions over two hours.

"This is a way for them to trip people up and to be able to hold onto their money," said Phyllis Blanton, who was able to convince her bank of 30 years to drop three of the five overdraft charges.

An Intrust spokeswoman declined to comment on the specific case. She said the bank, before reimbursing customers, typically requires merchants to write a letter explaining voided purchases."

This is exactly why it needs to be focused on. Note that the bank didn't drop *ALL* of the overdraft fees, it only dropped *3* of the overdraft fees, even though *ALL* of the overdraft fees were due to the bank not processing the void immediately.

$29 *BILLION* dollars vacuumed out of the economy.

The bank must turn a profit. Therefore, the bank must set the interest on your loan at a rate that will ensure a profit (or at least make a profit very likely). There is a risk that you will default on your loan. They have to take that into account when they set the interest rate.

My credit and my husband's credit are excellent - we will be paying less interest than we are principal. If our credit was crappier, we'd probably end up paying more in interest than in principal.

You are asking the bank to go without the money they're lending you for 30 freaking years! If 10 of us buy a $100K house, that's $1M that they're out! They have to have a compelling reason to do it, or else they won't do it, and we'll all be renting instead of buying. It's basic math and economics.

Don't like it? Find another way to finance a house. Let me know how that works out for you.

@Esquire99:

Oh, yes, because we only have *ONE* congressman, and he's overworked.

@Hank Scorpio:

IIRC, banks are required to process credits before debits.

@Skaperen:

Who in the hell writes checks?

Please stop.

You can't "bounce" a debit card. It either processes or is declined, in which case you simply don't get the goods/services you were looking for.

@TheFlamingoKing:

Actually, many (if not most [If not all]) local banks have gone under for issuing the same bad mortgage products that the big banks were issuing. Many of the ones that haven't gone under have been swallowed up by other banks.

I bank with BofA because it is convenient. There are dozens of branches in the city. If I need to withdraw cash, I can go to any of a dozen ATMs near my home and workplace.

If I bank with a local bank, I have to pay a massive fee for withdrawing cash from the ATMs beause the local bank doesn't *own* any ATMs. Most local banks are also far more restrictive about who they will open an account for, because they don't have the massive cash reserves that a larger bank can use for things like fraud.

Additionally, any local bank that has a number of ATMs around the city is usually involved in a partnership with a larger bank. So keeping your money in the local bank doesn't mean you aren't providing any support to the larger banks.

Re: Overdraft fees

They *didn't* borrow money from the bank. At least, they *wouldn't* have *chosen* to borrow money from the bank. They weren't given a choice.

@JohnDeere: You're paying more in interest than your house is worth? Wow.

Same. I don't care if some poor person is paying my way, it's their fault for overdrafting their account. Look at it as a tiny bit of payback for the tens of thousands I pay in taxes that they don't pay.

The author of this article speaks in generalities about innovating and finding other ways to make money. Funny, when a bank did that (by putting ads within your online statement on their website), consumerist criticized them for it! I don't think the consumerist will be happy until the banks stop making money entirely.

@TheFlamingoKing: "Nothing in smartmuffin's comment sounded "like a complete fool". It sounded like basic capitalism to me"

To the leftists who dominate this site, it's the same thing.

Let's review. Every transaction between you and a bank is voluntary. Nobody is forcing you to use their services. When you CHOOSE to use their services, you agree to abide by their rules, which are always stated. Yes, occasionally these rules are stated in fine print which some people CHOOSE not to read.

This couldn't BE any more simple. Anyone who feels the costs of using a particular bank isn't worth the benefits the bank provides you is free to switch banks, or not use them at all. Somehow, like with everything else, we as a society seem to have categorized banking services as a "right" rather than a business. Think the banks are so evil? Would you REALLY like it better if they didn't exist at all? No, you just want them to operate solely under YOUR rules and for as little profit as possible. Bankers are businessmen. They are not your slaves. They are under no obligation to give you what you want. You accept their terms or you go somewhere else. That's how business works.

@colorisnteverything:

Banking regulations are pretty simple. If you aren't doing anything wrong. Much like the tax code.

Things only get "complicated" when you try to skirt the regulations and regulatory bodies.

Of course we should be charged fees for a service. Only now we're going to be told up front what the charges will be, instead of some seedy underhanded hidden fee scheme.

If the local branch has too much overhead, then I guess we'll all end up switching to internet based banking, which doesn't suffer those same overhead costs. This will ultimately be more efficient, less wasteful, and better for humanity and the environment. Though perhaps less good for the makers of large steel vaults, bulletproof glass, and pens with chains on them.

I suppose you have to break a couple eggs sometimes.

@smartmuffin: @Hil-fish: @TuxthePenguin:

ahhhh, you see, thats what the bank WANTS you to think.

i still dont think interest on anything should exceed the price of the item financed.

@jvanbrecht: "reorder charges so that the highest amounts get run first to generate the maximum chance and generating an overdraft fee"

This canard needs to die. If you only spend what you have in your account, it will not matter how the charges are arranged. To wit, on the first page of discussion:

"For example, if four (lets say $20, $10, $2, and $2) checks get cashed in one day, they'll process them in order from largest to smallest. Now lets say you only have $15 in the bank when the checks are processed."

Had one used one's check register they would not have written $34 worth of checks w/only $15 in the bank. A third grader could have done the math.

An exercise. You have $200 in the bank (according to your check register). Arrange the following charges to generate an overdraft: $100, $25, $30, $15, $29.

Here is one example why...
Back when I have a national bank rather than my current credit union I was getting paid with a combination of cash and check. One day I deposited my cash so that my rent check would not bounce. Two days later when my landlord tried to cash my rent check, it bounced. Why? Because they reordered purchases made during the week and put deposits last, even cash ones, overdrafing nearly 6 purchases and my rent check in the processes. I stayed at that bank long enough to get the charges, monetary and legal, cleared before I jumped ship.

I don't use direct debit and don't recommend it. I would rather be in control of what gets taken from my account and when. Direct debit leaves you vulnerable to mistakes by the recipient and that could trigger the kind of overdraft fees we are talking about here. Then it's up to you to get the problem corrected, funds restored and fees reversed. What if you have a dispute over what is owed? A good example is people who sign up for gym memberships, cancel later and spend months trying to get the gym to stop drawing membership fees every month.

It's far better to have bills automatically charge a credit card where you can dispute the change in the event of a problem BEFORE anything is sucked out of your bank account.

Anything tied to your bank account including the use of debit cards for anything other than ATM withdrawals is a bad idea IMHO.

Fed up with it, I signed up for Way2Save. The bank "charges" me $1 for every transaction I make using my credit/debit card (and no, if my balance is $1 or less after all the transactions are tallied, they don't continue to do so) and puts it into my savings account. If I overdraft, they transfer money from savings to checking (without charging a fee) for the amount of the overdraft. I've had it for just over a year and I've only overdrafted 3 times since (and have not paid a $35 overdraft fee since). I also make sure that that money is not touched unless it's a dire emergency (read: I'm down to a single 6-pack :P ).

Do I feel empathy for banks? No, they're soul-less. Did I take responsibility for my actions? Yes, it was my own damn fault for letting my finances get so badly screwed up in the first place.

Overdraft fees are meant to cover costs, and penalize people for spending more then they have (thats my take on it, I could be wrong).

However, its the fact that banks will run deposits last (see my previous post about Capitol ones buyout of my bank), reorder charges so that the highest amounts get run first to generate the maximum chance and generating an overdraft fee, and then charging multiple overdrafts on a bunch of smaller charges.

That is the problem, that is the business model they seem to have chosen, and that is not okay in any way, no matter how you look at it.

That is gaming the system to screw the people who can least afford it, and by your mindset, thats okay. Well, you are wrong.

Why did we save them again? Oh, so we can save the failed system.

Nature does things right - their failures go away pretty quickly.

Then, they discovered they could earn a ton of money off fees. The shareholders loved it and said screw the 6% mortgages, we want the fees. Stock prices went up, executive boards loved it, and now here we are.

They're like drug addicts, the 6% on 10X the deposits are no longer good enough... they need the fees like an addict needs angel dust.

How can someone be taken advantage of when they can, at any time, pull their money and go to another bank? You do know there are local banks that aren't BoA or Wells Fargo, that offer much better programs in order to compete with the big boys?

Erroneous? As in "made in error"? No, these people borrowed money they don't have from the bank. That's the concept of "overdraft" - you used money you don't have. The error was on the account holder, not the bank. Anyone having troubles with a bank error can get that sorted out through customer service, or go to places like the local news or this very website to get assistance.

Nothing in smartmuffin's comment sounded "like a complete fool". It sounded like basic capitalism to me. People just want to whine instead of using their buying power to do something about it.

Overdraft fees have gone up because other fees have gone down. Because of overdraft fees, I now have interest-bearing checking, free use of ATM's (even non-network ATM's), free access to on-line and phone banking, free online billpay, ...

By punishing the financially irresponsible with overdraft fees, they're able to reward their responsible members. And their responsible members are actually the ones they want to keep, because they offer better options to make money.

Consumerist seems to think this is "unfair". But it seems like it's perfectly fair to expect people to (a) know how much they have in their account, and (b) not spend more than they have. It's fair to reward people who manage to do these things, and punish those that don't.

Let me respond to some specifics:
"The headline is a threat, warning consumers that current 'optional' overdraft fees will be replaced by mandatory fees."

In much the same way that overdraft fees replaced the mandatory fees. For me, this works out better. Whether they reinstate old fees (which would be difficult) or find a new way to charge people, they will need to replace this income. This also applies to the reordering of debits to maximize these fees.

"If your current business model relies on exploiting certain groups-and overdraft fees come primarily from the poor and the young-then maybe you need to rethink your business model."
It's not exploitation. The rules are the same across the board. Those who lack the responsibility to manage their finances get hit harder by these fees, sure, but it's not unfairly targetting them. There are no hidden rules here. Everything is out in the open to avoid these fees.

It's also harder for the poor and the young to get loans. Is that also unfair?

"What floored us about this line of reasoning is they seem to be saying that because current banking business models are flawed, they must be sustained;"
No, they're saying that even with that income, they still failed. So removing that source of income means that it has to be replaced with other income-generating measures, in addition to the extra income-generating measures they already need to implement.

"Translation: If you force banks to treat their customers fairly, you will be treated unfairly."
I still don't see how the banks are treating their customers unfairly.

"But here's an idea: some banks will innovate and find ways to offer services for low prices, or for free, in order to maintain a competitive edge."
You know what? They already did this. You know what way they found to offer services for free? They increased overdraft fees.

"If we can't keep charging overdraft fees the way we currently do, then you will have to pay for freeloaders."
They've got the freeloaders backward. I'm a freeloader, in that I've managed to not overdraft an account in a number of years. This is the 75% of their customers they're saying benefit from the current model of high overdraft fees. That 75% is the freeloaders, and we like being freeloaders (in fact, that's usually how we pick which bank or credit union to do business with!).

The consumerist has decided that punishing those who overdraft in order to sweeten the deal for those of us who don't is unfair. I don't see it. So long as we're all playing by the same rules, the game is fair.

@bohemian: If people don't know how much they have int heir accounts, I see that as a problem. I have never accidentally overdrafted, ever, and we don't make a ton of $$$.

You can get online to look at your balance, or call if you don't have a computer. In this day and age, there is no excuse. The alternative could be sending people to jail for hot checks.

I've seen a lot of people on here say they will never give their account/credit/check information to a third party, and I suppose security concerns are legitimate. But my main issue is convenience, and I like having all payments leaving from one hub, rather than the different payees reaching into that hub. I, too, would pay to keep bill pay through my bank.

I see absolutely no problem with overdraft fees. I will concede to the fact that many banks (including Wells, I will admit) have relatively high overdraft fees, but when you think about it, you're borrowing money FROM the bank. If you dont like this, put your money under your pillow or something instead of into a bank. Nobody is requiring you to keep your money in a bank.

Almost all banks offer some kind of overdraft protection. I know that a common type of protection that Wells offers is linking your savings and checking accounts. I have this currently set up, and on the rare occasions that I overdraw my checking, money is automatically transferred from my checking to my savings, free of charge.

Another way to save yourself from those overdraft fees is to KEEP MONEY IN YOUR ACCOUNT. if you keep a $100 minimum in your checking account; you most likely won't overdraft (unless you're a lavish spender, in which case you should either attempt to be more thrifty or not complain if you spend money you dont have)

Overdraft fees are essentially payday loans. They are there so that you dont bounce checks (which would create much more of a problem for you than a $20 fee).

This is a very good analysis of the kind of PR crap many people will actually believe. You really explained it well.

Why don't you try and find some of the lobbying materials that are thrown at congressmen and senators and analyze it the same way, once in a while. That would make for interesting reading and really put some controversial consumer laws in perspective.

@sammy_b: I think you should have to pay them. But I also think banks should have to put deposits on first, then make the deposits by the smallest amount first so people will bounce fewer purchases. I also think BOA needs to stop it's unsurly practice of charging OD fees when something hasn't cleared. They subtract the purchase from the balance and charge for overdrafts that never even occur. If you made a deposit that morning and it posts at midnight, before the purchases, an overdraft never happens. My friend closed her account w/them for that very reason.

I don't ever overdraft, and I support overdraft fees for the most part, as long as the banks aren't being smarmy about it.

@winshape:
What do you mean? I download my ING transactions in Mint all the time. ING only restricts access to Mint during their business hours.

I say keep the overdraft fees. I don't ever incur them, and we are a one income family who lives off a teacher's salary. I'm more than happy to have irresponsible perople footing the bill for me.

I hate BoA for the fees they've charged me for overdrafts, but I use them without any major complaints as they are the only bank I've found that doesn't hold any of my paychecks for an unreasonably long period of time. Plus they are everywhere, so when I need my money RIGHT AWAY I can go cash a check without incurring a fee. Would I stay if there was a better option? Of course not. But the local banks don't work for me for one reason or another, and the online banks aren't good because I frequently need access to my money the moment I have the check in hand.

When you do NOT have overdraft, the bouncing of checks costs the bank for each one (not as much as they charge you, but certainly in proportion). However, when you DO HAVE overdraft protection, there is no "per check" costs. There is the cost of loaning you money to cover the overdraft, but it should only be a one time cost for sending you the notice of the overdraft, plus interest on the loan. Or if money is pulled from a linked account, there should only be a one time cost. That's how the daily processing should work.

Well, OK, it does have a $50 minimum balance to be free. I would keep well more than that in there for my own convenience, anyway.

@MickeyMoo:

I agree with the branches. However, those officers you are talking about (the management below the CEO) are actually working MUCH harder than execs in most places. My father *is* one and is putting in 80 hours a week thanks to the multiple confusions concerning federal regualtion of the banking industry. It is a power struggle.

(Warning, crash course in finance)

If I promised to give you $10, would you rather have it today or in a year? Would you be willing to take $9 now instead of $10 in a year? That trade-off is the basis for time-value of money. In layman's terms, interest.

Furthermore, inflation tends to take hold, making a dollar ten years from now worth less than a dollar today (think about how your parents would say going to the movies for a dollar!). So the money you are paying back to the bank is worth less and less (comparatively). The interest is also to offset that as well.

In the end, you probably are ending up ahead with a mortgage. Especially when many believe that interest rates are going to be spiking soon. A 5% mortgage isn't bad when the going CD-rate is 4%.

I honestly feel that bank bill pay is no longer needed, as you can pay most bills directly with the biller, and there is no need to send a check, from you, or bank generated.

While I understand that it was a convenience that my money was available the night before, now its only available towards the end of the day on my payday, even though I know the money is dropped in well before that.

Tinfoil hat syndrome.. of legitimate gripe about how banks screw you... I will leave that decision up to you.

I on the other hand and switching to USAA (I want to use my credit union, but my wife has no access to the facilities, high security federal buildings, where the physical locations are, and for some reason we have no convenient credit union processing location nearby either.)

Despite all the problems with BoA, I will say that I've gotten really excellent service whenever I've gone into a bank branch of theirs, but YMMV.

@prag:

Maybe make the fee the same as the cost of the stamp, or let me buy say 10 online bill pays per month for $5, something, anything is better than the scam they pull now.

@Hank Scorpio:

BOA did the same thing to us, which would be why we no longer have an account there. The deposit was POSTED and showing in the online banking section, made several purchases, not only did they re-date the deposit (I have screenshots, they most certainly did) they re-ordered the transactions to produce the maximum number of OD fees. Guess my 15 years of being a customer didn't matter, account is closed, see ya, bye bye!

@TCama:

Please define exorbitant profits. Be specific. Should we also cap the wages of any individual at "enough to pay for food and shelter"?

Also, if compound interest had not "been invented", there would be zero incentive for BoA to loan you money at all to allow you to buy your house. With 30-year loans, depending on your interest rate, it's very easy to pay in interest about what the principal was when you take out the loan (that's certainly the case with my loan). But there are benefits:

1) you don't have to pay it all at one time
2) if it's a fixed-rate loan, your mortgage will stay the same every month until you pay off the loan - if you were renting it would likely creep up over time
3) you can use the interest you pay as a tax deduction, which eases the burden some.

Would you rather save your money until you're 50 or 60 and then pay cash for a house? 'Cause that's the alternative.

So, you know, quit complaining.

@TuxthePenguin: Would anyone here have a problem if the current overdraft fee system were 100% opt-in? Other than the banks, that is... I don't imagine that very many people would take the effort to opt in, especially when the terms of the agreement are spelled out in advance. True, there are a lot of articles on The Consumerist about agreements willingly entered into that are deceptively unfair or terms that change unfairly, but we're talking about overdraft fees here. Unless the banks get people to opt-in for a $5 per transaction fee, then sneakily change it to something bigger, how bad could it be?

I haven't had an overdraft in years now, but I will never forget crying over losing half a week's pay because of these policies.

(My current credit union would move money from savings to checking and charge me $3. That seems totally fair to me.)

Thus, people now have dozens of $2 or $7 charges, where before they wouldn't. Which would then become overdraft "protection" bait, costing math-addled customers hundreds when before they'd simply see on their ATM screen (for free): DENIED.

Kill it. Trust cash. Carefully trust credit cards. Distrust debit cards (not don't use them, but do so warily, as one would use explosives, handguns or brittle super-models).

@MickeyMoo:
Well, I work for one of these very large banks, and believe me, we are aware of the ridiculous nature of some of these fees. However, I would like to clarify a few things from a banks point of view.

1. Closing more branches and lowering the pay of the middle managers is happening every day with these bank failures. For the consumer, all this does is increase the distance you have to travel to handle your banking. In the future you will likely see a ratio of 5 ATM's to 1 branch. The model is changing.

2. Your math is too basic on the checking accounts. The bread and butter of the branches are the business accounts which are expected to pay for those deposit accounts. Many of them have multiple thousands up to a million dollars per account. Banks do service the general public, but certainly don't profit heavily from them. This is why there are just as many private bankers and business bankers as there are branch managers of banks, because each of these business lines are more profitable than Timmy's savings account with $68 dollars in it.

3. Not to justify the increases seen lately in the fees; but overdraft fees are there for a reason. When people "float or kite" checks, which used to work in a less sophisticated age, they are very often leaving a liability with the bank; on a monthly basis we write off overdrawn accounts that have become uncollectable. Overdrawing your account is a justifiable reason to have a penalty placed on your account. Despite recent government intervention, banks are profit generating corporations.

Oh, right. This is capitalism.

@Esquire99: You're right. This is taking up valuable time they could be spending investigating steroids in baseball!

Our branch manager is rarely there. She gets paid a rather significant salary but I see her out shopping almost every time I am out and about during the week day. Whenever I do go into the branch to do business she is never fricking there. They could easily close a few of these branches and cut dead wood employees like her.

BTW. I thought banks used to make the bulk of their profits off of the loans they held. Since those generated more significant interest and have plenty of fees of their own.

[money.cnn.com]

In order to have OD protection in case of a screw up or mis-processed items you then also allow them to let through transactions for a $1 pack of gum and even ATM withdraws on an account that is NSF.

What they have done is found a way to take something that used to be a standard safeguard and turn it into the biggest inadvertent payday loan scam in the world.

Maybe the banks figure we wouldn't use services if we were forced to pay for them but it works for ATM fees doesn't it?

If the choice is between being subject to a checking account fee (which I can't avoid) and an overdraft fee (which I can), I'll go with the overdraft fee.

@hi: BTW: read Hank Scorpio's post below. This just happened to him.

Local banks and credit unions FTW.

Banks also used to allow you to tie savings to checking to automatically kick in so no overdraft fee even happened. Now they won't do that because they can make a ton of money no allowing you to do this.

They have also taken to allowing card swipes when an account is already out of money as a "courtesy". Whom that is a courtesy for I don't quite know.

Banks are quickly outpacing the oil and pharma industries as the most corrupt and hated in the country. They don't even try to hide what they are doing.

@sammy_b: Also the banks will make sure you get overdrafted by pushing larger transactions to the top of the queue and not giving an accurate picture on how much money you have in the account.

I don't know exactly how they do it, there's an article here that describes it better. But they get you and it's done on purpose. It is NOT for your protection and it only hurts those people who don't have the money. They are scamming poor people out of their hard earned money.

Basically, what they did was apply a deposit I made after a bunch of debits went through on the same day. The debits, naturally, were applied highest to lowest, creating several overdraft fees instead of just one valid one (valid, that is, only if you ignore the deposit that they put in after the fact).

The phone rep refused to acknowledge the fact that there was a deposit made that would have prevented any overdraft fees, and basically made it seem like it was my fault for the way they do math.

Needless to say, I'm in the process of changing banks. The really sad part is, I've been with this bank since it was a small, local bank with only two locations, which has since been bought out and merged a couple of times. I can't imagine the bank that I did business with 20 years ago would treat their customers the way this bank treats me now, but there it is.

1. The banks charge overdraft fees?
2. The overdraft fees are too expensive?
3. The problem is REALLY the reordering of the transactions?

To me, #1 & 2 can be solved with making overdraft protection opt-in. That way you must make a informed decision to accept it.

#3 for the most part could be solved by making banks post in chronological order, but that doesn't solve the problem of checks/deposits/holds. Would checks hit in the order that they are redeemed to the bank? Same with deposits? And if there is a required hold on the deposit, how do you treat it? You have no legal right to that money during that hold (hence the hold).

To me, this seems to be a simple solution. But it is a solution that will bring back other fees, such as monthly maintenance fees for checking accounts. Whether right or wrong, "freeloaders" are getting supported by others paying overdraft fees.

Free checking??? tht is only in the name. To get free chekcing most of the times you have to have atleast one of these

1. min balance
2. direct deposit
3. transfer from another account

Other than these I havent seen a really free checking.

This crap has also caused me to do fewer transactions, ATM draws and rely more on cash. I will keep my old account to use the direct deposit and free bill pay. If they try to start charging me I will eventually move those to.

This nonsense about having to charge you for checking accounts it total BS. I am old enough to have had a free checking account back in the 80's. I was young, fairly broke and was able to find a free checking account that also had a line of credit in case I ever did go over. Now the same bank is crying the same pathetic tune this PR drone is. I don't buy any of it for a second.

1. Re-enact the 'Glass Steagal Act'. Don't allow banks to gamble with your money. This is the 'root' of why the whole housing market and bank bailouts happened. Commercial banks were allowed to act like investment banks and gamble away your money. And they lost their bets.

2. Don't allow banks to charge overdraft fees. Overdraft fees are nothing more than deceptive unwanted loans with extramely high interest. You can call it an overdraft fee... but in reality they are giving you money that you have to pay back with a fixed rate. A scam is a scam.

3. Follow Austrian School economics. All these bailouts were predicted by those following this 10 years before it ever happened.

Just food for thought.

Also the point of the article is that for the most part they don't need to allow the transaction in the first place. They've gotten us away from balancing check books, which used to be common. So now we don't know what our accounts hold and we rely on our bank to "let us know" by denying charges if we went over. Like my bank, they used to be a credit union and were better then they are now but they are still pretty good. They have an available balance that is pretty close to spot on and when it hits $1 I can't make any more purchases on my card so I only overdraft when an occasional check takes me over. All banks could do this, but then they wouldn't be able to charge you overdraft fees. That's what this article is about.

I really don't get the outrage here. If you all hate the banks so much, if you really believe that what they're doing is akin to selling the organs of homeless people, why on Earth do you still continue to patronize them?

Nobody is FORCING you to be a customer of Bank of America, or of any bank for that matter. If you have a problem with their policies, take your business elsewhere. All of these fees and policies are fully disclosed in the fine print. The bank isn't screwing you over, you're screwing yourself over.

And free checking? At Bank of America? Where do I get that? The only option they give me is $8.95 a month. Couldn't the overdraft fees I pay at least subsidize MY free account? Apparently not.

They do have a point about free checking. Years ago, only children/students and senior citizens got free checking - everyone else had a mininum balance, and got hit with a monthly fee if they didn't meet it.

[money.howstuffworks.com]

Isn't this the same kind of crap they said when the laws about credit cards were about to be changed? "Say goodbye to all the perks, and be prepared for FEES! LOTS OF!!"

And don't the banks make money off of debit card transactions in the form of merchant fees? If not why the heck do they encourage their use SO much? Banks (and credit unions actually) are always running little contests that get you a free transaction or free money because you used your debit card.

I've seen the same kind of contest for using billpay services as well.

If these sercvices cost so much for the banks they wouldn't be enticing us to use them this much.

I say call their bluff, stop it with the preditory fees and then see what REALLY happens. The banking industry needs to change, and obviously they're only going to go kicking and screaming.

@JohnDeere: As someone who has more savings than debt, I STRONGLY disagree. Compound interest can be your friend if you manage your money right!

They know that the rich or comfortably middle class don't really care either way because they don't get hit with the fees or if they do, shrug off the $39 quite easily. The only way to rile up some angry 'mericans is to get the poor to oppose something that benefits them.

Also, as far as I know no one is arguing that overdraft protection shouldn't exist as a product, just that it shouldn't be mandatory the way it usually is now. If I accidentally overdraft my account I don't want them accepting my $3 latte purchase and then tacking a $35 fee onto it.

Read the "RELATED" posts at the bottom of this one, or just do a search for "overdraft" in our search field, and you'll quickly see how far out of control it's gotten.

i have my mortgage with BOA along with free checking and savings. the craptastic invention of compound interest is making them more than my home is worth over the 30 years. my shit better stay free forever.

compound interest should be illegal.

This has to be one of the all-time greatest sentences ever posted in any article on this site. Bravo!

They also have a habit of having a very high cut off point at which they just prevent the withdrawal all together. Someone who may for whatever reason thinks they have enough money can make a bunch of over drafts and not know until its too late. After the first or second one, the bank should just not allow the attempted transaction.

Well... How about you close some of the branches and lower the pay of the layer upon layers of middle managers and executive staff who basically sit around trying to figure out how to frak over their customers ooopps - sorry - I meant to say invent new and exciting revenue generating products (with the help of the lobbyists they pay millions of dollars a year to manipulate regulation changes)

I have BoA and overdraft protection from my checking account to my linked savings account. When I was living paycheck to paycheck I would write out my rent check and hope that I'd have enough in my checking account - when I didn't (and this only happened once or twice) BoA would transfer $2-$300 from my savings into my checking account to cover it, and then charge me a $20 fee. Stupid me for not keeping track, but I'd rather pay a $20 fee than have my rent check bounce.

Sounds like a bunch of self-serving propoganda to me, too. "Oh no, the sky is falling, everyone take shelter!"