The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.
Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.
I still don’t get how folks don’t love this president. All these things are great for typical folks like me.
Well the repubs stopped him from doing all the things that would have made him amazing, so he obviously totally sucks.
I would love to hear “listen Jack, we want to get stuff done but the Republicans are blocking everything we try to pass. Give me a strong majority in the house and senate and we will pass x, y, and z. If the supreme court blocks us, we’ll look at ways we can balance the court.”
I just want to hear a plan and what we need to do to make that plan happen. You need 60 senate votes to pass universal healthcare? Say “give me 60 senate votes and we’ll pass universal healthcare”
Because it’s all tiny changes that don’t effectively help people. No big structural changes cause the billionaires managed to put a stop to that with their agents in the Senate. And so the average citizen is left to blame the person they see as the cause of it all, cause he’s the big boss obviously.
Citation: gestures at everything
yeah still. I have never had so many beneficial things come out of a presidential term in my life.
Trump got us “free cash” and virus test kits. Bush got us “free cash”.
Obama got us crappy healthcare. Which he stole from Republcain Mitt Romney cause Obamacare is literally Republicans dream healthcare system.
Nobody remembers the starting circumstances of the Democratic presidents brought in to clean up Republican messes.
From my interactions with co-workers, it can be that simple. And also the trans trans trans are coming to steal your kids and wife. Diabolical
I would argue that the insulin thing was not tiny at all. Biden has been a good President.
The IRA is a big structural change that puts us on a path where we might actually escape global armageddon. It doesn’t get us there, but it puts us on the path and buys us just a little bit of time. And its entire philosophical approach builds constituencies massively, which means the longer it exists, the more it will go into a virtuous cycle. So long as Trump doesn’t get in next cycle and dismantle it from within, it will be incredibly sticky.
It’s almost certainly the most important bill passed in any of our lifetimes. Not just climate-wise, but legislation-wise. It’s very technical and kind of boring, which makes it not as exciting, but it’s still absolutely huge.
I don’t give a fuck if people hate Biden for whatever reasons they have. But at least this one piece of major progress, somehow passed through an uncontrolled congress, must not be denied. If we deny it, that’s probably it for our civilization. If we let the achievement be ignored, climate policy will probably be over and the ecosystem will be allowed to die. Any other issue is petty next to total collapse of the global climate and if passing this bill was ALL he could achieve – even ignoring some of the other stuff like filling departments with the most diverse crowd ever in American history – it would still have been a good term for a president. Better-liked presidents have achieved less.
Leading this with - I will vote, and I will vote for democrats if it’s what’s needed.
But the reason I view the (objectively good) things that he’s doing with a grain of salt is that it feels like he’s only doing them because of an impending election.
Why - when the democrats had control of all 3 branches of government in 2020 and 2021 did they not do anything that mattered?
They could have unpacked the courts by expanding them. They could have ensured abortion rights. They could have fixed the voting rights act (or implemented something that addresses gerrymandering, racial or otherwise). They could have overturned Medicare Part D. They could have fixed the compromises made when the ACA was written. They could have fixed the Citizens United decision. They could have amended the TCJA so that the tax cuts for the wealthy sunset alongside with the tax cuts for the poor (or even flipped it, so the tax cuts for the poor are made permanent, and the tax cuts for the wealthy sunset, unlike how it was written)!
They could have done so very, very much. But instead they wrung their hands about Manchin and Sinema, claiming that’s why they were a ‘do-nothing’ congress, and waited to lose the house so they could claim gridlock and return to merely being an alternative to republicans.
But even the core of that justification is dumb. They could have supported candidates prior to 2020 that weren’t just republicans running on the democrat ballot.
The issue I think people have with Biden is not that he himself is a bad guy (although he did contribute majorly to the prison-industrial system in the U.S., and championed preventing student loan discharge through bankruptcy when he was a senator).
It’s that he’s the figurehead of a political party that is more interested in gaming the system than they are in leading the people it is supposed to represent. The only real difference between democrats and republicans in that regard is that republicans deliver on their (often wildly unpopular) policies, and their base respects them for it, even if it means they will die homeless in a polluted gutter.
The Democratic Party, and by extension, Joe Biden, do not lead, and thusly do not earn respect. Their moves are only the smallest incremental moves, and that does not work at a time when the world and society is redefining itself several times within each generation.
Man. Sorry. My soapbox is tall today.
I totally get that and I do not like the situation, but when the choice is with or without lube im not going to forego the lube in protest of the situation.
I’m there, too. It’s just such a gross compromise.
The crux of the issue is probably structural. If you only get two choices and both are chasing the same sources of money in a system that heavily favors a very small set of investors, then, well… any effort to get votes by distinguishing themselves is ultimately performative.
In the end, we all wind up getting served shit sandwiches, but one party tells us they don’t want to feed them to us, and the other party has convinced their voters that shit sandwiches are delicious, or at least more offensive to ‘them’ than they are to ‘us.’
But he won’t stop a war between 2 countries that he isn’t in charge of so I can’t see myself voting for him /s
That’s the media fueling their usual bull. Bernie put up a vote on the issue and 72 out of 100 said ‘Yes’ to allowing Israel to keep their genocide going. It’s crazy
I don’t love him. I think he’s taking half measures mostly as an attempt to maintain an economic status quo while pushing for a little bit of social justice (as a treat). It’s a move in a positive direction… but mostly because it’s the best way to be in opposition of the other side.
I’ll still vote for him, because that’s the only two choices we’re given for the presidential election. I’ll still push for better, and vote more for who I think will actually make a difference at lower levels (state/local races), but I literally can’t vote for who I “love” because it just won’t make any difference.
Love doesn’t enter into the equation, sadly.
If this works, making overdraft fees $3 is fucking huge.
Some points, directly from the Consumer Financial Protection Bureau:
• Among households that frequently incurred overdraft/NSF fees, 81% reported difficulty paying a bill at least once in the past year.
• Among consumers in households charged an overdraft fee in the past year, 43% were surprised by their most recent account overdraft, 35% thought it was possible, and only 22% expected it. Consumers who overdraft infrequently are more likely to be surprised by a fee
• While just 10% of households with over $175,000 in income were charged an overdraft or an NSF fee in the previous year, the share is three times higher (34%) among households making less than $65,000.
This is actually a good example: the very concept of overdraft fees is obviously a tax on poverty that should be made illegal as soon as possible.
Instead, Biden (who’s been known to lie a lot even by politician standards) wants to lower them. In a year. If he’s re-elected.
Even his aspirational campaign promises are a compromise between the obvious only just course of action and retaining the status quo that enriches his owner donors.
Well there has already been things like this that are done in his current term like no surprise billing and capping student loan amounts to the initial principle. I like that he keeps putting out new things rather than waiting for after the election. We have had to much of this, oh its an election year so lets hold off on things which then take time to get going. At least if he does get re-elected it can go into place quickly rather than starting at square one.
It’s weird to have parasocial relationships with politicians, it’s how fascists get elected. Always hold them accountable.
neither do i. I would not be surprised if there is not high agreement on that with folks.
Well, you said you don’t get why people don’t love this president. That’s an obvious reason.
I don’t love that he’s a genocide collaborator. That’s why his Democratic support is so low.
I wouldn’t love living under a dictatorship. Sorry to put my own needs and my family’s needs first.
Ah yes, I forgot Biden is personally committing genocide in a country he’s not president of.
Ah right, good ole “I didn’t get my hands dirty, therefore I’m not culpable”
He is playing defense for the current Israeli regime, helping keep it propped up not just through aid and arms, but through diplomatic pressures as well. He’s not solely responsible for Netenyahu and his cronies actions… but that doesn’t mean his hands are completely clean, either.
Overdraft fees should just be illegal. Bank knows how much money is in there. Don’t allow withdraw if it’s insufficient.
What happens if you have $5 in your account and visit two stores and purchase something for $4 in each store? Not all stores process transactions immediately. Is the store supposed to just accept the loss and the bank doesn’t honor the transaction? I think if it’s a credit based debit card overdraft has to be a thing in order for this to work.
Frankly, yes. The company should just absorb that.
When you accept a credit or debit card, and decide to process the transaction later on, you are incurring a risk. Sometimes that risk will be realized. If you don’t like it, don’t incur that risk.
So this will just make sure they put either extra charge on credit cards or disallow it entirely, fucking over everyone, not just those who overdraft
When you accept a credit or debit card, and decide to process the transaction later on, you are incurring a risk. Sometimes that risk will be realized. If you don’t like it, don’t incur that risk.
Could easily be turned around, “when you get a credit card, you are incurring a risk. Sometimes that risk will be realized. If you don’t like it, don’t incur that risk.” Don’t spend more than you have and you won’t get a charge.
Not all stores process transactions immediately.
They can, if they choose to do so. You say not all process transactions immediately, but I don’t know of any that process offline card transactions.
Is the store supposed to just accept the loss and the bank doesn’t honor the transaction?
If they choose not to process the transaction immediately, yes, pretty much. They can retry the transaction periodically until it goes through, or they can use the payment information they have to identify the buyer and demand payment.
Would be insanely risky to process a day’s worth of transactions offline, precisely because of the risk that transactions would bounce. Hell, the whole reason credit cards exist is to defer this risk. Businesses pay 2-3% of the transaction value to avoid this risk.
What happens if you have $5 in your account and visit two stores and purchase something for $4 in each store?
Then your bank sees the first transaction, does some very rudimentary math, sees the second transaction and says “Not enough in account to complete purchase” and bounces the card.
This already exists for bank cards in the form of a maximum line of credit. If you have a $500 line of credit and you try to purchase two $300 widgets on credit, I guarantee you that the second transaction will fail to go through. But if you have a $500 bank balance and try to do the same thing, you get an Overdraft Fee instead.
When I make a purchase using a debit card, it goes through this machine that accesses the debit network and my bank, on the other end, says “yes, the pin is correct and the chip looks good, and they have enough funds”. Similar process for credit cards. Why wouldn’t the transaction be processed at that point other than to create the deliberate risk that the person might overspend if you allow them to?
Brazil, 20 years ago, I was a student on a shoestring budget. I set my debit card so that I’d get an SMS after any purchase so I’d be on top of things in case shenanigans happened. I go to the small grocer on the corner, slide my card and type my pin. Before I can put my wallet back in my pocket, my phone dings. My bank was telling me where I purchased, when, how much it was, and how much was left in my account.
Are you telling me first world banks can’t do this today? Is it Brazil that’s so ahead technologically or is it greed preventing the banks from getting such a basic system in place?
This might be one of the unintended side effects of the law. If you have a low balance account or a ‘bad’ credit rating. Banks might simply stop offering debit cards that work on credit card stations.
This probably won’t happen unless overdraft fees are underwriting the risk of unpaid overdrafts. I’m not sure how many people just cancel or abandon accounts that go negative. I’d guess that it’s low but only banks would have the actual numbers.
I’m not sure how many people just cancel or abandon accounts that go negative.
in the USA at least the CHEX system largely prevents this. Essentially if you abandon a checking account that is negative, you get put into the CHEX database. When you go to a new bank to open a new account, the new bank looks at CHEX and sees what you did, then won’t give you an account until you go back to the first bank to get cleared. Nearly all banks use CHEX or something like it. So unless you’re just writing off the option to do retail banking, you won’t be able to abandon accounts.
Why would you spend $8 when you only have $5?
Outside of fraud the only reason you’re account is going negative is from you spending money that’s not there. It’s not a “poor” fee, it’s a fee that banks are within their rights to charge you for spending money that isn’t yours.
People need to have some semblance of financial responsibility, it’s not society fault that they spend money they don’t have
Outside of fraud the only reason you’re account is going negative is from you spending money that’s not there.
Because of the timing of credit to accounts, you can easily find yourself in a situation in which you have a $500 balance, a $300 deposit, $600 in charges, and an overdraft fee entirely due to the order in which the bank processes the transaction events.
Often, the events can be days apart and the bank still initiates the debts before the credits. As noted above, the bank may even initiate the transactions in reverse order of size, so that you get the maximal number of fees in a given rebalancing.
People need to have some semblance of financial responsibility
This isn’t a problem for people who use credit cards rather than debt cards. Credit cards have a set credit balance and if you try to spend more than the balance the transaction simply fails. Since you pay the card off once a month, you don’t have a dozen different transactions hitting your account in a particular order. So your maximum exposure, against the most bad-faith of banks, is one overdraft fee a month.
But credit cards are issued based on credit history. If you’re opening your first bank account and you don’t start with a high balance, you won’t get one. So fucking with debt cards isn’t a sign of financial responsibility, its a sign of financial predation.
It’s a form of scam. Any conversation of responsibility ultimately has to recognize the bank as a predator. Otherwise, you’re just setting people up to get preyed upon.
Overdraft is a service you can turn on and off at most banks. If it’s turned off, it works exactly as you described and the transaction is rejected for lack of funds
Why should it be illegal when you can just tell the bank to turn it off? Serious question.
overdraft fees only affect people who don’t have a lot of money. I remember being ruined by them as a college student several times. they should be illegal. let them figure out how to get the operating revenue from people with more capital.
I dropped Wells Fargo after they re-ordered my pending payments to maximize overdraft fees.
I’d actually overdrawn like 25 bucks after making a couple 3-5 dollar purchases followed by $50 purchase. They moved the big payment up front so each of those little payments incured a 30 dollar fee.
Fuck them.
I had that happen too with BoA, a long time ago. My initial reaction was “how in the fuck is this legal?!”
Then I nearly blacked out as a torrent of un-forgotten media, of all the jokes, comedic hate, and disparaging sentiment towards banks, flooded back to my minds eye.
Sadly, my only answer to this problem was “make more money”, which really isn’t an answer at all. Later, I switched to a credit union, which I would have done earlier had I known that was an option.
Pretty sure this was (is?) standard practice for every major bank, bc Citizens did the same thing to me. With no regulation, why wouldn’t a bank fuck its most vulnerable customers as hard as possible?
I worked as a banker there in the early 2000s and those OD fees was brutal. I remembered when it went from $24 to $35 and how much it completely devastated people’s lives.
Right before I quit, ANYONE with an OD fee that I saw, I just reversed it without question. Then I got in trouble for reversing thousands of dollars before I was written up. I put in my 2 weeks after and in those 2 weeks kept on reversing charges.
I would tell people to not bank here when I worked there unless you have at LEAST 25k cash or investments or a mortgage over 250k. Otherwise, you’re going get FUCKED by fees.
Yeah, I remember when they hosted this whole festival in my town giving away free hotdogs and just going way over the top…
The fact that this was like a week after Wells Fargo was officially banned from doing business in California and really needed a good PR win likely had NOTHING to do with it… rolls eyes
I’ve heard of shit like this, and not just from banks. A friend of mine had his insurance drop him without telling him, solely so they could send him a notice about it in the hopes that he’d renew and have to pay extra in “Coverage Gap” fees…
This shit needs to be illegal.
It’s actually worse than just debits before credits. It’s debits in reverse order of amount, then credits. So if you get your paycheck deposited in the morning, stop for gas, pick up a coffee, go shopping, go home and pay your utility bills and rent, they can order it so the rent goes through first, then the bills, shopping, gas and coffee all trigger separate overdrafts, then the paycheck is added last, stealing hundreds of dollars from you when you didn’t spend a cent you didn’t have.
Pretty sure banks already got smacked for this and structuring transactions to maximize fees is illegal now.
Okay, yes, but counterpoint from my conservative relatives “Why were you simply not more responsible? I never have this problem.”
Probably because they have enough money in their account to always have padding. People who live pay check to pay check don’t have that luxury.
Yep. Around 2014 I was absolutely ruined by exactly this, and ended up having to drop out of college about it. Never did finish my degree. Over about half a year trying to get my finances back in order while being slammed with overdraft fee after overdraft fee after overdraft fee, I ended up “”““owing””“” Suntrust Bank something to the tune of like $1200 that they pulled out of their asses by reordering items. Meanwhile I’m overdrafting my account by $8 to get some ramen packs that I could eat for the next 2 weeks, knowing damn well this $8 case of maruchan ramen is going to end up costing me $43 after the overdraft fee. Legitimately the closest I’ve ever been to just killing myself to escape the grind.
They’re fucking lucky that all I did was settle up and close my account the following year, because they deserve arson, and I know some people that would have been more tempted to that than I was.
Why are overdraft fees even allowed?
If the account doesn’t have the funds, don’t allow the withdrawal.
If someone needs to borrow money, they will use a credit card.
I don’t know if all banks allow it but you can turn overdrafts off and get that exact behavior. It’s hard to believe but overdraft protection was originally advertised as a feature.
My credit union isn’t great, but one time I was $600 short on my tuition payment and they let the transaction through and gave me a call later that day and asked when I expected to pay it back. I told them two weeks and they said “okay”. I’m not even sure I was charged anything.
Credit unions be cool like that, at least mine is. Still glad my parents made my account for me, I joke with them that the account is older than me (it actually is)
Good on your parents. Credit Unions can’t do everything for you that a bank can, but that’s why you just get an account with them for a specific purpose, and use the credit union for everything else.
I was the one to liberate my parents from the fee-laden Bank of America experience.
How will the executives and top shareholders afford their private jets if you start taking away their cruelly excessive fees?
For real though, overdraft fees are fucking evil. “Since you are now out of money, you will have to pay back even more of the money you don’t have” is just evil.
I believe it’s a holdover that originated in the limits of technology in the past. Before the Internet or even dial-up card verification, purchases were made “on faith” if writing a check or paying with a card. The fees were there to prevent banking customers from abusing the pretendness of pretend pretend money. Without the discouragement, a person may go try to buy something at multiple places, and even if a vendor called the bank to verify funds were available, each time the bank would say, “oh yeah, funds are available,” until all the paper came back to the bank.
That being said, it’s the future, accounts can be verified and mathed upon instantly, and these fees have no place anymore, although I’m sure the banks will try and sell them as, “we’re just trying to help out the poor by allowing them needed money when they might not yet have it available, for a small convenient fee.”
Especially since the technology of today can mess up in such interesting ways…
My brother had enough to buy a fancy new laptop he had been saving up for, so he did, but the website goofed and accidentally processed the order TWICE… He canceled the second order and they refunded the money, but he still owed a fuckton in overdraft fees, and since the cancellation wasn’t instaneous and his bank charges him an extra fee ontop of the overdraft fee for every day his account is in the negatives…
Yeah he was fucked for awhile
Always use Credit for online purchases kids, the charges are far FAR easier to dispute if there’s a fuck up and it doesn’t overdraft.
what they don’t tell you up front is that it’s up to the user to put a lock on the account so if there is no money, it stops allowing a withdrawal. And then to charge a fee as ‘overdraft protection’. But by default it’s open. It’s very shady Facebook-privacy style way of stacking it against the user just so they can make money on ignorance. Their business is to keep the user ignorant. Very end stage capitalism if scamming is defended as a business model.
Same goes for spending limits and region tracking/locking on checking accounts and associated debit cards.
When moving from BoA to a credit union, I was astonished at how this service was enabled by default. I once purchased a large TV and got a call from the bank’s security department confirming the transaction, as I was putting it in my car. I would expect no such service from a major bank.
I’ve gotten those calls a few times from BoA. But it’s always like 2 days after. And it’s not necesarily big purchases. I’ve gotten a TV and been fine. But I got Minecraft when that first came out, and got a call for that. One time I got a call for getting lunch at a fast food place. And these are so far and few in between that they don’t really make me feel safe. It’s more so just annoying.
FYI, only in the us.
In Europe a bank account has a 1000$ limit (like a cc) with its appropriate interest (bit less as cc). No lump fee tho
It really depends on what you negotiate with your bank, at least in Germany, though it always takes the same form: Either the withdrawal gets instantly bounced, or you negotiated an automatic credit. On average about 12% interest, definitely limited to 1000 or thereabouts or whatever lower sum you negotiated and the bank allows (depending on your regular income), if you’re poor and they’re a public or cooperative bank they probably just won’t give you one, or cancel it if you’re constantly in the negative, or limit it to something like 50 bucks, “buy food for the end of the month” type of territory. (And if you’re banking with a private bank that’s your own damn bloody fault they make a business out of fucking over their customers).
And while those 12% sound high if used as intended – need to pay something but your wage check is still five days away or so – then the interest is negligible. It’s not a substitute for an actual credit which are way cheaper and any honourable bank will tell you to refinance if your account is constantly in the red. You after all pay them to manage your money, not steal it.
Oh: When bouncing certain kind of transactions (all modern online ones) the transaction will just fail, you’ll see it right there on the POS terminal. With older offline stuff the bank will refuse and bill whoever wanted to withdraw from your account some small amount, you’ll then have to deal with that later as they’re bound to add it to the bill you have to pay. Long story short if you’re short on money don’t have your utility bill on automatic withdrawal, transfer the money manually they won’t break your knees for delaying it a couple of days.
