Despite all the whining, banks still make bank from overdraft fees
From all the whining, you’d think banks loss of their golden goose, automatically signing up people for debit card overdraft protection, was all but gone now that it has been outlawed.
Well, apparently that isn’t the case. According to Bloomberg Business Week (Overdraft Fees, The Dough Keeps Rolling In), banks have been able to keep about 70% of the overdraft revenue by using every manner imaginable to cajole customers into signing up for overdraft protection, something that clearly isn’t in customers interest.
Among some of the tactics is calling up customers that have had debit cards rejected due to insufficient funds (you know, what is supposed to happen when you are out of money) and giving them the impression that they will incur fees when this happens unless they sign up for overdraft protection.
Make no mistake, overdraft protection on debit cards benefits the banks only, not the customer (unless you like spending $40 on a latte).
To add insult to injury, the article claims that most big banks are still rearranging credits and debits under the guise that it helps customers. What this actually does is, when an overdraft does occur, it increases the likelihood that more overdraft fees will be applied, as banks will debit the largest item first, regardless of what order it all happened.
Fees & charges | admin November 6, 2011
