Monday, August 10, 2009

One thing you can count on when the chips are down

Banks will figure out ways to up their fees - in this case overdraft fees. The ones who get hardest are those who are already struggling to survive as it is. One thing I've learned over the years is that if you get caught in cycle of overdraft fees, it's pretty damned impossible to get out (especially if you live from paycheck to paycheck). Assuming that you have the same basic expenses from month to month (rent, utilities, food, transportation, etc.), those fees mean less money to pay those expenses the following month, which mean even more risk of being overdrawn and incurring overdraft fees; wash, rinse, repeat. One commenter made a point about how banks go about charging those fees:
It's bullshit too because most banks will honor your largest payment first, then your smaller ones. So, say you have $400. You make a a $398 purchase, a $2 purchase, a $5 purchase and a $10 purchase, they'll start with the largest one, so you get hit with an overdraft fee on everything after the first large purchase. If they did it the other way, you'd only get one overdraft fee, since you could cover the $17 of the smaller three purhcases.
What the commenter suggests is a simple reform of bank practices that would minimize fees, and would likely minimize the risk of customers ending up in a cycle of holding negative balances over the course of a monthly cycle. That all of course assumes banks are motivated to prevent negative balances in the first place. On the contrary, I've been convinced for a while that in general the banking industry cares less about preventing their customers from holding negative checking account balances and more on bleeding their customers of every last nickel and dime they can get their filthy paws on.

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