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Bank (robbers) of America

7 October 2009

Who do you bank with?  Chances are it’s one of the big two; Bank of America or Citibank.

In any case, you may have noticed the steady increase in overdraft fees in recent years.  Up nearly 35% since 2006, overdraft fees have become the topic of great concern within the halls of congress.

Overdraft Fees

Overdraft Fees

Congress is getting serious about what big banks charge their customers when they spend more than the available balance within their account.  If you are looking for an explanation as to the difference between “available balance” and “actual balance” — that’s a topic for another blog entry.

Currently, nearly 3 of every 4 banks automatically enroll customers in “overdraft protection” programs or the like.  In these instances, bank created protections only help if a linked account has funds available in it; nearly 80% of customers with OD protection do not.  This situation leaves a giant gap in the bank/customer relationship.

Today, the average national overdraft fee is $35.  In many banks, it is entirely acceptable to assess as many as 10 overdraft fees per customer per day.  As a former Bank of America employee, we were encouraged to defend any overdraft fee assessed unless it fell under one of two conditions: It was the first time an account over drafted in a year or the overdraft was less than fifty cents.  During my time with the bank it was totally normal to receive calls from customers who had been hit was $300 in overdraft fees.

However, in response to the momentum this ball on capital hill has been gaining, Bank of America has decided that on October 19th, 2009 they will begin capping the number of potential overdraft fees per customer to 3 a day.  Meaning it will no longer be possible to rack up $350 in fees in one day. Instead, it will be limited to $105.  A step in the right direction… but far from a beneficial customer/bank relationship.

This year banks are projected to profit nearly 40 billion dollars in overdraft fees alone.  Add that to the billions they’ve received from tax payers and one may wonder why overdraft fees are being assessed at all.

HELPFUL HINTS:

If you frequently fall victim to overdraft fees, many banks can apply a status to your account known as a “pay-none.”  This means that when your balance reaches zero, the bank will not allow you to spend any more and therefore will not be assessed any fees.  Call or visit your bank and ask about this service.

If you are like me and are just tired of being swindled by corporate capitalists altogether, I suggest closing your bank account completely.  If you’re convinced you need an account and debit card to survive, open a Paypal account.  The interest rates on money-market Paypal accounts is typically 3 to 5 times the best bank rates in the country.  Paypal offers 1% cash back for every purchase made with your debit card.  Also, it is impossible to overdraft with Paypal – they assess no overdraft fees.

What does 2010 hold for bank customers?  While many banks are adjusting the way they assess fees, the average fee is expected to rise.  Keep an eye on your ledger and a fist on your cash – greed is still in season.

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