Now That Banks Can't Use Overdraft Charges As License To Steal, They Plan To Screw Debit Card Users

[Amerigo Vespucci]

Now That Banks Can't Use Overdraft Charges As License To Steal, They Plan To Screw Debit Card Users Instead

First it started with ATMs, which banks used to cut their workforce. Then it was debit cards, which automatically processed transactions that used to be done manually. Every step of the way, banks have figured out how to get us to do the work for them, and now they're looking to charge us for the privilege. And yet, the administration doesn't understand why we want Elizabeth Warren running the financial consumer protection bureau? Because we need someone who's on our side:

Already, JPMorgan Chase & Co., Wells Fargo & Co. and many other banks are reducing or phasing out rewards programs that gave users cash back for using debit cards. Chase has been testing a monthly $3 fee for debit cards in some states, and Bank of America Corp. and Citigroup Inc. have added new fees to some checking accounts.

Consumer advocates are steamed. Electronic debits are much less expensive to process than checks or cash; banks have saved billions in operating costs, said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. But the industry has largely pocketed those savings rather than pass them along to customers, he said, and now they're looking to charge users for the convenience.

"We were trained to use cards, and now they're telling us it's not enough, wanting to charge us for the privilege," Mierzwinski said. "It's diabolical."

[ZombieHorde]

1. They know online transactions make going back to cash only is very inconvenient.

They just love screwing over the poor.

[Sarah Ibarruri]

2. What? Banks can't charge for overdrafts? What?

Okay, I've been out of the loop and trying to pay no attention to news, since we've had a fascist trend in this country for decades, and the media reports as if to a 6 yr old: fantasy, mythology, bullshit, and no truth.

So what's the story about overdrafts?

[Ruby the Liberal]

4. They can, but you have to opt into it now.

If you don't opt in, they simply decline your card if you don't have the funds in the account rather than charging $35+ to pull the money from savings or an attached credit card.

[Sarah Ibarruri]

12. Aaaaaaaaah! Interesting! Can they sign you up for it without you knowing? nt

[Chan790]

14. No. They cannot.

If you fail to respond to requests for Overdraft Coverage decisioning, they have to opt you out under the current law. The deadline for them to opt you out was in April IIRC. You have the right to opt back in at any time, or in and out as you choose as many times as you'd like.

It is important to understand the difference between Overdraft Coverage (OC) and Overdraft Protection (OP).

OC is when you agree to let the bank make the decision on whether to pay overdraft transactions (debits) rather than to automatically decline them. If a client is opted-in to OC and the debit is approved by the bank, the debit will be paid and you will be assessed an NSF* fee, usually ~$35 and the account will become negatively balanced. Every subsequent charge, if approved, will also accrue the NSF fee for as long as the account balance remains negative. Theoretically, it's possible to run up $350+ in fees on $10 in transactions if you charge $1 10 times. Also, you may be charged an extended NSF after no less than 7 calendar days if the account remains negative. The law as written only pertains to OC. Nobody I worked with at the bank opted-in so you can tell what a bad idea it is to do so. Generally the only people I know who did so were business people deathly afraid of a declined card at business lunch. Non-personal accounts (businesses, trusts, etc. Anything that is not a personal account) may not opt out of OC.

OP is a supplemental opt-in service offered by most banks and credit unions where in the case of an overdraft, the charge will be automatically covered by a transfer from savings or a charge against a linked line of credit (usually a credit card, occasionally a HELOC) and a smaller fee (or depending on your bank's offerings no-fee. My former employer charged a fee, my credit union I bank with does not.). In the case of OP, no NSF may be charged as the account is not negative at any time. There are no laws currently covering or regulating how banks conduct OP. Most people opt for OP as a convenience.

These are entirely different things that do the same thing. You may choose to opt in or out of either one completely separate of the other. Approve both, decline both, or approve one but not the other. Banks may not make client approval of OC a condition of being offered OP. If they offer OP, they must offer it equally or explain why they are not, subject to fines.

I hope this was clear. I'm still adjusting to no longer being a banker and talking like a human being again. If you or anybody has any questions, please ask and I'll explain further. I rather enjoy using my knowledge to screw the banks.

*-Non-Sufficient Funds

[Agony]

20. Thank you for your time! nt

[customerserviceguy]

28. Wow, great comprehensive explanation

I had suspected the gist of the facts you presented, but it's good to have them so authenticated.

[Sarah Ibarruri]

38. You are AMAZING. Thanks so much for the explanation.

I was thinking it wouldn't be a bad idea if you created an original post of this information, since most of us (the non-bankers) are clueless about this. It would help many of us.

[Chan790]

39. I should do that or bookmark it to link back to. Also, a correction.

I did realize that I made a small omission. OC opt-out only applies to certain transaction types, namely signature-based card transactions.

They can still nail you for the NSF if you write a check that is paid out and you don't have the funds to cover it, in the case of ACH* debits which overdraft the account or ATM & PIN-based transactions that overdraw the account (though these last two logically don't occur often, they'd usually decline at the point-of-sale automatically.)

*-Automated Clearing House. A type of automatic pre-approved-by-the-client scheduled transaction; usually something that occurs monthly or quarterly in the exact same amount like insurance payments, student loan payments or in some cases rent (These are ACH Debits). Also, payroll direct deposits (Those are ACH Credits) You'd know if you have an ACH transaction though as you'd have to have given your account number and routing number to the company making the withdrawal or deposit. I find it helps to think of ACH Debits as a "Direct Withdrawal" or "a Direct Deposit from you to someone else". I do a lot of ACH transactions so I set up a separate checking account (used for nothing else) for ACH debits and transfer the exact amount every month into it several days before the first ACH debit comes out. (Online Banking lets me know if the transfer fails so I have time to make sure the $ is there.) I keep a minimum fee-waiver balance in the account at all other times.

[Ruby the Liberal]

41. As a fellow industry member, I highly encourage you to make this info an OP as a PSA.

PM me a link if you do and I will K&R you for visibility.

[Sarah Ibarruri]

48. Same here. Or, start a blog. nt

[Sarah Ibarruri]

47. This belongs in a book titled, 'How to protect yourself from banks'

I'd buy it!

[Ruby the Liberal]

42. Agreed and requested the same below as a second motion.

:toast:

[ellenrr]

3. No reason to let the mega banks use your money

Switch!
Find a smaller bank, or a credit union.
I did, am now much happier, thumb my nose at wells fargo, and my conscience feels better.

[blueamy66]

10. OR......don't spend money that you don't have.

easy as pie

[Towlie]

5. Very similar to government firing toll booth workers and charging drivers extra for "toll by plate."

It's happening here in Florida: Politicians who ran on the platform of creating jobs are firing all the toll booth collectors, tearing down the booths, and putting in computerized "toll by plate" systems for people who don't have electronic pre-paid passes on their windshields.

And, of course, there's an added "administrative charge" added to the toll.

Diabolical indeed.

[KittyWampus]

6. How fucking stupid- "And yet, the administration doesn't understand why we want Elizabeth Warren"

How fucking stupid can any commentator get? What was the point of a gratuitous and erroneous slam at Obama?

[Erose999]

9. How exactly is that erroneous? We ask for Warren, who do we get? Alan Simpson's Catfood comission

[KittyWampus]

13. WTF? Do you even know who Warren is and where she works?

[LooseWilly]

36. For a consideration of the Warren criticism- I point you to post #35

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1365767&mesg_id=1366956

The "point of a gratuitous ... slam at Obama" is to try to add pressure to that which Democrats are trying to apply, to get him to make a recess appointment. I dispute your use of the term "erroneous" as being... erroneous.

[KittyWampus]

7. Debit cards are incredibly not secure. Too bad f/ the stupid, gratuitous & erroneous slam at Obama

I might have recommended this thread.

[scarletwoman]

8. I don't get why people use the Big Banks. Did someone hold a gun to their head?

There are alternatives: local community credit unions, local community banks. Do business with them and you help empower your local economy.

I find it hard to feel sympathy for people who willingly assist in forging the chains of their economic oppression.

sw

[Erose999]

11. People are lazy and want the "convinience" of having a branch of their bank everywhere they go.

That was a big part of it for me. I was encouraged to join a credit union by my employer, and I wanted to but the CU only has 3 atm's in the entire state of GA and the other 3 are hundreds of miles away. I travel a lot so ATM access and the fees that come from that are an issue.

In the end I joined the credit union and I feel a lot better because of it now that my money is going into helping my co-workers buy homes and vehicles instead of going into

oil speculation
subprime mortgages
hedge funds
metric fuckton CEO bonuses
arms sales

etc etc. It requires a bit more financial discipline and restraint, but thats all for the better really.

[LeftyMom]

19. Many credit unions are part of a network of linked ATMs.

I can use my credit union ATM for free at pretty much any other credit union's ATM I've ever seen. http://www.co-opfs.org/public/locators/atmlocator/

[krispos42]

53. I had a good reason

When my ex and I split in 2005 we moved to Minnesota. At the time I didn't know what the hell was going to happen... get back together at some point, stay separate... and I sure as hell didn't know where we were going to ultimately wind up. So I got an account at Wells Fargo.


Later, Wells Fargo buys Wachovia here in New England... and shortly thereafter my ex decided to move to Canada and become a trucker. So I took our son and moved to Connecticut so he could have some stability and excellent public schools. And I didn't have to change banks once.



In South Dakota I was with a credit union.

[grasswire]

15. I have a chase business account, and there's a reason

Our clients are able to make a payment at a chase bank anywhere by depositing directly into our business account, credited immediately. A local credit union would not serve that purpose.

[scarletwoman]

17. I'm not talking about people with "clients", I'm talking about people's personal banking. nt

[Romulox]

24. My local credit union has lousy hours, few locations, and higher fees.

:shrug:

[customerserviceguy]

32. I agree, but

In many communities, the megabanks have chased away or bought up the local community banks. One of the reasons to start a community bank by investors in their 40's and 50's is to have some big-ass bank buy you out in twenty years, and it's an easy retirement after that.

Credit unions are a good choice, where they function well. When I lived back in the Pacific NW, we had them in the cities, the suburbs, and even out in the country. They had convenient hours, top notch service, good locations (near a store or town center where you had to drive into anyway) and their ATMs and websites were run by professionals who made using them a breeze.

The credit unions here in NY and NJ (where I work) are just not ready for prime time. I'm about to leave my second CU, I've transferred all of my regular banking functions over to a community bank that has performed flawlessly. They already do charge $1.00 for a cash-back transaction on a debit card, so I use that card solely for withdrawls from their own ATM, right around the corner from where I work. I put my spending on a credit card, get frequent flier miles, and pay the thing off in full electronically.

Not sure what I'm going to do if they jack fees up. There may not be any rational alternatives.

[justiceischeap]

40. A lot of the smaller banks won't give you an account if you have bad credit

forcing some us to use the bigger banks willing to accept the risk of holding your money. It doesn't make sense to me but I've actually come across that situation.

[Sarah Ibarruri]

49. You're right. Big banks are thieves, and I need to move my $ to a credit union already nt

[sendero]

16. One fine day..

... retailers are going to start offering CASH DISCOUNTS and put a BULLET IN THE BRAIN of the CC and DC vultures.

[SoCalDem]

18. I think once upon a time some actually tried to do this and were shot down

I have been quite successful with cash discount when I have showed them the money and said I was willing to walk away unless they offered me a discount.. I got $500 knocked off carpeting that way, and $2k knocked off the price of my husband's "new" truck..(new to us)

[sendero]

27. People are more sophisticated..

... about how this game all works now. The retailer takes a 2% haircut, the card issuer keeps 1% and offers cash-back and other incentives with the remaining 1% (these are round numbers, but they are pretty close).

So, the retailer is the one getting screwed.

I use credit cards way more than I would to just pick up my 1%. If the retailer offered a cash discount, he could stop taking a 1% haircut on many sales and I'd get my 1% so I'd just as soon use cash.

Of course, there are lots of folks that would continue to use CCs no matter what, but if even 15-30% of customers paid cash instead it would give the banks a reason to cry and that suits me just fine.

[customerserviceguy]

33. Then they also have to factor in the costs of handling cash

Sometimes change gets counted out incorrectly. Sometimes cash 'disappears'. You have to have armored cars and secure places for people to count cash. Let's not forget the purchases that might not be made until payday, if ever, credit cards get people to buy a lot of crap on impulse.

While swipe fees might have been priced too high, the merchants were getting something of value from those fees that they will now have to pay for in other ways.

[MadHound]

21. Cash and/or checks solve this problem. n/t

[Romulox]

23. Nope. Those "swipe fees" were built into the price, regardless of whether you pay cash or credit

The recent bank regs give a windfall to merchants, who will most likely not reduce their prices.

[customerserviceguy]

34. Do merchants accept checks as readily any more?

I haven't written one for a transaction in many, many years. When I did, it was in a small town on the Olympic Peninsula of WA state, where everybody knew everybody else. I have not tried it a single time since I've been on this end of the country.

[Chan790]

37. With some exceptions where checks are common...

the answer is generally no.

Many of those that do, do so by tele-check (or other automatic-process franking) meaning they get electronically processed same as card-transactions with the same rates and fees. There are reasons for this, the main one being that they get their money faster than they would if they deposited the check and had to wait for it to clear and any Regulation CC holds to expire.

Banks would very very much like checks to disappear altogether on our end, do not be surprised if the next client fuck-off is a supplemental fee for check usage. If they could get people to stop writing checks (edit: in favor of inter-bank transfers, debit cards/EFT, ACH and online bill-pay) at the same time they push them into using direct deposit, they'd cut the amount of hands-on labor in the banking process by 75% or so. Less tellers, less batch processors, less document verifiers, less operational receivers on the end of the bank the check was written on...a lot of human hands touch the average paper check on the bank's side before the money sees your account and is debited from the payee's account. The average bank branch sees 1000 checks a day. My inner-city branch sees 3x that. That's a lot of paper passing through an "assembly-line" of people tasked with specific specialized jobs. 1,000,000,000 check items daily nationally altogether.

[Romulox]

22. PS: Those merchants who got the swipe fees reduced? They WILL NOT be reducing prices.

This whole thing was a big con.

[MadMaddie]

25. WTF?

I get it about the banks...but

<snip>
And yet, the administration doesn't understand why we want Elizabeth Warren running the financial consumer protection bureau?
<snip>

This statement is a blatent lie, the administration is the one that is pushing for Warren. This kind of bullshit pisses me off. She is leading the organization. Allowing writers to get away with these lies has got to stop. If the adminstration wanted the banks to continue with these blatent attacks on consumers they would have never pushed Warren.

[LooseWilly]

35. The Warren comment is probably a reference to hesitancy to make a recent appointment...

Obama has resisted calls to make a recess appointment of Warren... apparently thinking that he can "bring Republicans around"... (or some such pipe-smokery, I suppose)

I refer you to a quick search of "Obama makes recess appointment of Warren" (http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=Obama+makes+recess+appointment+of+warren)

First response I get: http://blog.aflcio.org/2011/06/09/urge-obama-to-recess-appoint-warren-to-consumer-bureau/ ... (June 9) "President Obama can win this fight for working families if he uses a recess appointment to put Warren in the director’s office at CFPB. Click here to send a message to Obama urging him to use a recess appointment for Warren when the Senate is out of session. The CFPB is scheduled to open its doors July 12. So please act now."

Second response: http://crooksandliars.com/susie-madrak/dems-push-obama-make-recess-appointme ... (May 20) "With Senate Republicans committed to blocking all potential directors of the new Consumer Financial Protection Bureau, congressional Democrats are pressing President Obama to accept reality and offer Elizabeth Warren a recess appointment to head the agency she conceived of."

Third response: http://tpmdc.talkingpointsmemo.com/2011/05/dems-press-obama-to-recess-appoint-elizabeth-warren-to-run-consumer-bureau.php ... (June 9) "With Senate Republicans committed to blocking all potential directors of the new Consumer Financial Protection Bureau, congressional Democrats are pressing President Obama to accept reality and offer Elizabeth Warren a recess appointment to head the agency she conceived of." {Obviously the article that the previous result was referring to...}

Fourth respons: http://www.readersupportednews.org/opinion2/277-75/6351-gop-cant-block-recess-appointment-of-elizabeth-warren ... (June 22) "If you're following the story of whether President Obama will nominate Elizabeth Warren to head the Consumer Financial Protection Bureau (CFPB), you've probably heard that the Republicans found a way to block even a recess appointment. It turns out that's mistaken."

It would appear that a whole lot of people are un-pleased with the Obama administration's weakness on a lasting appointment for Warren. I would suggest you re-examine your use of the accusation "This statement is a blatent {sic} lie," ... as it may be something of an interpretation—but hardly a lie, let alone a blatant lie.

What Obama says in interviews is all well and nice... but judging by what he does he really isn't "pushing for Warren"...

[chill_wind]

45. Exactly, LW. Listen to his rhetoric but then watch what he does.

It's Dawn Johnsen all over again. When he wanted insurance his man Bernanke would get confirmed a second time by Dems who hated Ben's guts, he sure as hell didn't sit on his hands.

[Ruby the Liberal]

43. Yet where is the recess appointment we have been screaming about for 2 years?

[chill_wind]

46. DawnJohnsen and Liz Warren are strong ethical reform-minded women.

This is a President who appoints gatekeepers. Summers, Geithner and Holder- pretty much told us all we needed to know a long time ago.

[sufrommich]

26. Join your local Credit Union. Problem solved. nt

[Cleita]

30. I have my accounts in a credit union and I couldn't

be happier. Also, they pay me a few cents every month in interest even on my checking account.

[Sarah Ibarruri]

50. That does it. I'm switching. nt

[Cleita]

29. My mattress is looking better and better all the time.

Unfortunately, now that seniors have to get their Social Security with electronic fund transfers, it will hit them with a charge that many can't afford.

[Liberal_in_LA]

31. oh gawd. Time to go back to using cash

[Hippo_Tron]

44. I wish they wouldn't repeat the meme that it's BECAUSE they can't use overdraft charges

That's what the banks would have you believe. They say that in order to recoup their losses they HAVE to start charging for to use debit cards. That's utter bullshit. They would be testing out these ideas regardless of whether or not they could still rip you off with overdraft fees. When your profit margin goes from some number in the billions to some lower number still in the billions, nothing is forcing you to recoup your loss to stay in business.

[annabanana]

51. hahahahaha.. Just wait until everyone in America starts paying by check!

Do they REALLY want all that paper gumming up their works again?

[Sarah Ibarruri]

52. I wonder... do credit unions their own debit cards? nt