Anyone living paycheck to paycheck is probably very familiar with how bank overdraft fees work. As one such person, myself, I am the first to admit that I have overdrawn my checking account at least eighty times in the past two years. To the sad sum of probably a couple thousand dollars. A couple thousand dollars! How are banks in financial turmoil with people like me giving them all my money!? The government isn’t responsible for bailing them out, I am!
Alas, my dirty little secret has been made public. Now, my fellow overdrafters hiding in the shadows can step into the light and not feel ashamed of their financial retardation. Well, we should be a little ashamed. Currently, I’m about two months clean from my financially irresponsible behavior. And while my bank account is still pathetic, at least it’s in the black. I know firsthand how important it is for people teetering on the financial edge to be aware of the schemes of big banks. That is, until July 1, when new legislation goes into effect protecting consumers from crippling overdraft fees.
If July 1 seems like a long time to wait for protection, you should be aware of a couple things. One is that banks “reorder” purchases so that the largest transaction comes out first. Second, is that any debit card transactions made on Saturday and Sunday will not post until Monday. So, it may seem like you’ve got the money to cover all your weekend expenses, but come Monday you could be hurting. Always utilize online banking to monitor your funds. I know my bank, Bank of America, has an “available balance” tracker so I can see exactly what transactions are pending and how much money I actually have in my account.
Basically it comes down to you the consumer. It’s tedious work tracking every penny, but we must do it. Or face the $400 worth of consequences (which happened to me one Monday after a weekend of tiny debits here and there that added up to a three-figure overdraft total when my rent check cleared first). Ultimately, it is our money and our responsibility to keep it out of the hands of greedy banks.
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Comments
Derek
January 22nd, 2010 - 3:09:13 PM
I don't subscribe to your assertion that we are responsible for tracking every penny. The banks have the technology to stop a transaction if money is not in the account. They should not be let off so easy. I once sued Citizensbank for such behavior and they refunded my money "Because I was a valued customer." We need to write letters and report them. Citizensbank gave me a line that it's all in the contract. I seem to remember from my freshman law class, that a contract is unenforceable if it is not in the public's best interest. They are wrong and I will always fight them.
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Mar
January 23rd, 2010 - 6:26:28 PM
You ARE responsible for tracking every penny. It's YOUR money. If there were no debit cards, you couldn't walk into starbucks and get a 4 dollar latte if you didn't have any cash. So, why use your debit card to buy it if you're not sure you have enough? if you don't have the money, don't spend. it's not the bank's job to tell you if you have money or not. they tell you up front when you open an account, if you spend money you don't have, you'll be charged a fee. i just can't jump on the sympathy bandwagon here.
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Chris
February 6th, 2010 - 11:08:25 AM
Derek the problem is that it has been proven that these financial institutions function on a complex algorithm that allows certain transactions to pass right on through while others are stuck at the red light. The bank's technology that you ascribed with functionality and praise is actually built and maintained by humans. To err is human but for a bank to forgive...well. If banks had the same financial structure as churches they might actually stand to make a buck instead of breaking it off inside me every time I make a ten dollar error. I've done the math on my own checking account and in two months time 60 dollars in my apparent lacking financial management skills has cost me 280 dollars. I do agree with you on the urgency to write letters and make this ludicrous behavior stop immediately. Mar: Yes you are right in that we are responsible in tracking every penny. Many people's rational is that it is just too easy to swipe a card and forget about it. But in the same way that customers of banks have spent "floating" checks from transaction to the next,it is no different or any less shady then banks who seemingly float the money on certain debit transactions. I'm not one for sympathy either which is why I'm about 12 hours away from going back to a purely cash system. Studies have shown that reality over purchases sets in and is retained longer when you actually hand someone 500 dollars for rent or 180 bucks for car insurance. Our modern society functions on visual stimulation so much so that we need it to unfuck our twisted spending habits. We need to be able to see what's actually taking place at every turn in our money management and we have the responsibility to do so. What makes me really salty is that we've put a man on the moon so you'd think there would be some technological regulation in place at these banks to keep debits from taking place when the account is in the negative or there isn't enough to cover the transaction. It is without a doubt in my mind, the worst of the worst in terms of poor business practice. I know for a fact that bank managers get bonuses based partially on fees issued. To err is human but for a bank to forgive overdraft fees...well that's just ludicrous.
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Chris
February 6th, 2010 - 11:11:29 AM
Nice article by the way Kendra. On point in ever possible way.
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