The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.
Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.
Heck if overdraft fee’s are only 3$ I would have over drafted all day when I was younger. That’s free borrowed money
Honestly banks should just block debit cards and return checks if it’s short by any amount. Get rid of all that funny business all together.
It’s not free borrowed money but I’m sure someone with poor financial literacy may see it that way (which is like the majority of young people). If you over drafted $30 it is a 10% fee, and that’s every time you run your card buying something. It’s a fee you will pay with your future potential wealth.
My parents removed overdraft from my account after my sister overdrafted her card all the time in HS. It should not be on by default and it should be legally mandated that you have to sign a waiver understanding that overdraft is a shitty fee designed to keep you from ever building wealth or savings.
So, my OD limit is $500, my fee is $35 regardless of how much I go over. Often in my poorest of months, I would wait till my account got very low, make sure there wasn’t any autopay or pending charges coming, then take out the $500 cash from an atm. I would use that cash to live on till my next paycheck, and deposit whatever funds were left over. My bank would reject any additional charges because its past the limit. This way I wouldn’t stack OD fees, and that’s less than 10%. In this late stage capitalist dystopia, I’d say that’s probably the best deal I could have asked for, outside of more money.
My problem when i was younger was i didn’t pay attention much to my bank account and would unknowingly overdraft. So i would get hit with 10 over draft fees out of nowhere for buying gas here, a pop there, a drink at a restaurant, just small charges that if i were smart didn’t need and would have just done what you did. It’s the un anticipated overdrafts that killed me when i was younger.
Agreed. That’s an option on my acct. Unfortunately it doesn’t stop majority of those with poor financial literacy to go nuts with it. It would be best if the option did not exist at all.
The idea of “owing” has changed a lot the last 100 years. Used to be ok to have a little debt. Meant you weren’t going anywhere, you were part of the community, invested. Thats changed now that you owe some obscure billionaire or hedge fund down the line. Means nothing. Changing the idea of how we handle debt as opposed to not letting people acquire it feels more appropriate.
Do they charge a flat fee in the US for overdrafting your account instead of absurd interest on the overdrawn amount?
Typically yes… Even my Credit Union has a $35 fee for the first overdraft in a given time frame and then it goes up by $5 for each subsequent overdraft in that same period.
The same credit union will, as a courtesy, refund up to 3 overdraft fees per year but only if you call in and basically beg a customer service rep because you’re aware of the policy.
Do they not? I know I’ve had my debit card bounced before. Maybe it’s just a thing with my bank. Only thing they’d do is transfer money from a savings account, charging you 15 dollars instead of nothing if you’d done it yourself.