Is your bank fee-ing you to death?

To make up losses, many banks are increasing the fees they charge customers for things like overdrafts and non-sufficient funds (NSF).  The Washington Post reports that “Banks struggling to survive have become increasingly reliant on the fees, which could total $38.5 billion this year.”  The most common method recently to glean fees from customers are charging large fees for overdraft charges without telling customers.

Many of these charges are made with debit cards which are used like Visa or MasterCard.  When you charge something on your debit card you may expect it to either go through normally in which case you might deduce you had the necessary funds in your account to make the charge, or they may reject the charge in which case you’d rightfully think you didn’t.  The trick is that the banks will now allow charges to go through that put your balance negative by a small amount (usually no more than $100 from combined charges) and then charge you a fee of $30 to $40 each time you do it!  This situation comes up more often for more people as checking balances get closer to zero in a bad economy and with numerous “automatic charges” coming through each month it can be difficult to know your exact balance at a particular time.

chaseThe bank I’m with right now, Chase, has recently been canvassing its customers with snail and email advertisements requesting that they explicitly “opt in” to their “overdraft protection.”  HINT: NO ONE WANTS TO DO THIS There’s absolutely no legitimate reason any sane person would want to opt in to this feature unless you are a high level masochist.  For the privilege of letting you make charges over your account balance up to about $100 they will charge you $34 each time you do it.  Even if you like the idea of getting a $100 loan with $34 in instant interest which is extremely illegal you can amazingly get a better offer from the many payday advance stores which I guarantee are near your neighborhood.

Personally I opted out of this feature on March 11th of this year, but that still didn’t stop them from allowing a charge from my grocery store where I was near a zero balance but thought I had slightly more money than I actually did from going through as an overdraft.  ($1.80 to be exact) which they immediately charged me $33 additional dollars.  Yes, $33 in interest on a $1.80 loan.  Do you think we’ve been too hard on the mafia?

This charge was made on the 24th of March and I am still wrangling with Chase for them to remove the fee from my account.  Of course the only real answer is to keep enough of a buffer in your checking account to be sure these charges don’t happen and to be aware of the predatory practices of your local bank as they strive to maintain record profits in this weak economy and the expense of the customers who are hurting the most.


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