How Shady are Bank Overdraft Fees?

Clusterstock is a finance news site with a very pro-capitalist readership.  Read the comments if you want to see the anti-banking sentiment.  When a bunch of capitalists agree that banks are robbing people, something very criminal is ocurring.

There are some good comments regarding the shady practice of overdraft fees.  It's definately time to reform overdraft fee process.  I am sure some libertarian will say that it's FREEDOM OF CONTRACT!  Those people would also say that Nero and Caligula did indeed publish the laws in Rome.  So what if no one could read the laws.  They were there.... somewhere.  

Here is my contribution to the horror stories:

Oh, and yes, I paid $26.40 for a Starbucks once. While in law school, my direct deposit hit my account a few hours late. This was before the days of online banking made it easy to simply check my account first thing in the morning. 

As a young, naive student, I thought a DEBIT card was different. It's a debit card, so if I don't have money in my account, it won't work. Right? Right? Isn't that why a DEBIT card is different from a CREDIT card? 

Had I know that my deposit was going to hit my account late, I would not have purchased my Starbucks. Why didn't my card just shut me off. Oh, that's right: The bank wanted to do me a FAVOR by authorizing the charge. 

This one (not mine) should make anyone's all-time-greatest list:

A friend of mine CLOSED an account before moving out of state. She forgot she linked her (rarely-used) iTunes to it. She made a $0.99 purchase months later. The bank let the charge go through against the CLOSED account, and charged her an overdraft. She hadn't left a forwarding address for her CLOSED account, so the bank had no way to contact her. 

The bank kept tacking on additional fees, all unbeknown to my friend, and finally put her on a private industry blacklist of check bouncing deadbeats, which there is no way to get off of, and now denies her access to any mainstream financial services, like opening a bank account, for SEVEN YEARS. 

As to myself? I once wanted to write a check for the full amount of my account balance. I checked the balance at the ATM, including getting a mini-statement to know if my last checks had cleared. Then I wrote a check for the amount on the balance statement. Guess what? They charged me $1 for the statement, AFTER it was printed, so I got an overdraft fee. 

F**K these fees and these banks. It's deliberate exploitation, and has nothing to do with holding people responsible for their behavior as you claim.

Comments

[Christian Prophet]

I take it you are against freedom of contract, and therefore against freedom in general. In other words, you are a would-be slave master. Right?

Or is there an imperceptable line between a "do-gooder" and a slave master? See:
http://spirituallibertarian.blogspot.com

[Brooke]

Hell no. Hun, I agree with you one hundred percent! My mom just deposited $140 at the bank in my account to help with my car insurance. I had $132+ $140 from my mom and then I made a $50 paypal transfer.. Grand total=$322 in my account. I payed my Car insurance which is $138 and got gas and food from Wendys and then cold medicine from Rite Aid & a $20 credit card payment. Well.. Iguess since my mom lives out of state her CASH deposit she made WITH a TELLER INSIDE THE BANK doesnt clear for 24 hours. So my $132 was $6 short causing a $35 overdraft fee.. And each purchase I made after was another $35 overdraft fee.. Long story short they took all my money, i'm still negative $10 and this doesnt count my $20 credit card payment that hasn't gone through yet... They said I can expet another $35 fee on Monday when that posts..
All i can say is FUCK BANK OF AMERICA

[ContractLaw]

the problem here is that there is no contract. banks don't operate according to contract law. just walk in to the bank and ask them to show you where you signed and consented to that fee schedule. its called fraud not contract law. Of course, in a free market those who commit fraud would be made to make restitution, and their reputation would quickly fail causing them to lose many business opportunities...

Instead a coercive group of men & women wiht guns (Calling themselves government) steal my and your money to keep BofA in biz....

How is any of that "libertarian"? Such a cheap shot, or you don't know what libertarian even means...

[New rules]

Bank of America has recently changed their business rules on their overdraft fees. In the past, as long as you had money in the bank on the day the item cleared (posted) you were fine.

Now, they are going back and basically "backdating" overdraft fees even when the debit/charge had not actually "cleared".

For instance if you go to a resturant and put in a charge for $15 on your debit card on 7 July, and it does not clear until the 12th. If you go below $15 prior to that charge posting - you WILL get an overdraft fee. Then if your overdraft fee causes you to go into a negative balance... guess what - ANOTHER over draft fee! That's $70 right there, because they changed rules.

Heck - the bill hasn't even posted!

[Howard]

Well here is a new one. I was an idiot and went to a strip club. Had no paper money, so I used my chase card. I was charged 903.00 and refused to sign. I notified chase the next day and insisted my refusal to pay. I received a provisional credit while they conducted their investigation. About 30 days later I was paying some bills, and was reviewing my account. Well since I have auto bill pay on some of my accounts I need to verify my balance. Guess what I discovered, Chevy Chase had removed the 903.00 from my account and I had 125.00 left in my account, and 124.00 in pending charges. Well that kind of sucks I thought, but oh well, until monday arrived and OOPS, there was a 115.00 auto bill pay deducted. leaving me with 9.00 to pay my 124.00 charges which all were attched to my account THAT DAY. I had 22 Insufficient fund fees, as opposed to 1 for the auto bill pay.