Overdraft Fees a Thing of the Past?
One of the latest undertakings of our United States is to crack down on banks and their overdraft fees. On Monday a proposal was introduced in which banks would be required to ask customers if they would like to be enrolled in overdraft protection, rather than just automatically enrolling them.
Every time I have opened a checking account, the clerk has always explained overdraft protection policies to me and asked permission before enrolling in such programs. Apparently, the majority of banks in the nation will automatically enroll their customers in such programs with no consent. I know a lot of people that probably wouldn't necessarily mind if a bank automatically enrolled them in an overdraft protection program, they would be mad at the fact nobody asked permission to do so. When banks do this, it comes off as being very sneaky, and the banks in my opinion lose a portion of their integrity. People have good memories, and they will always remember when a corporation, especially a bank, has done them wrong. According to a study by the Federal Deposit Insurance Corp., "Currently more than 75% of banks automatically sign customers up for overdraft programs." That's a huge majority of banks that are sneaking behind their customers backs. Regardless if it's a good program, I think they should still seek customer approval.
Senator Chris Dodd, who is also chairman of the Banking Committee has said, "At a time when many can afford it least, American consumers are being hit with hundreds of dollars in penalties for overdrawing on thier account by just a few dollars. Banks should not be trying to bolster their profits at the expense of their customers." Agreed, times are tough right now for all Americans. But Americans have a terrible habit of living beyond their means. If people repeatedly overdraw their bank accounts, the banks should charge an overdraft fee. Banking isn't a right, it's a business. Having said that, I do believe that these overdraft fees should be reasonalbe and proportionate to the amount they have overdrawn. A customer who has overdrawn their account by $500 should be charged a higher fee than somebody who is overdrawn by just a couple of dollars. Another idea I agreed with in the bill was that, "The Senate bill also requires banks to disclose to customers details about how an overdraft charge was incurred and what can be done to fix an account balance on the same day the overdraft fee is charged." That seems fair to me. If you were to overdraw your account, but bring the balance back to good standing on the same business day, the fee should be dropped.
Overall, I think this could be a good piece of legislation. I just wish their next undertaking in the banking world is that of ATM service fees. Those are getting ridiculous!
Every time I have opened a checking account, the clerk has always explained overdraft protection policies to me and asked permission before enrolling in such programs. Apparently, the majority of banks in the nation will automatically enroll their customers in such programs with no consent. I know a lot of people that probably wouldn't necessarily mind if a bank automatically enrolled them in an overdraft protection program, they would be mad at the fact nobody asked permission to do so. When banks do this, it comes off as being very sneaky, and the banks in my opinion lose a portion of their integrity. People have good memories, and they will always remember when a corporation, especially a bank, has done them wrong. According to a study by the Federal Deposit Insurance Corp., "Currently more than 75% of banks automatically sign customers up for overdraft programs." That's a huge majority of banks that are sneaking behind their customers backs. Regardless if it's a good program, I think they should still seek customer approval.
Senator Chris Dodd, who is also chairman of the Banking Committee has said, "At a time when many can afford it least, American consumers are being hit with hundreds of dollars in penalties for overdrawing on thier account by just a few dollars. Banks should not be trying to bolster their profits at the expense of their customers." Agreed, times are tough right now for all Americans. But Americans have a terrible habit of living beyond their means. If people repeatedly overdraw their bank accounts, the banks should charge an overdraft fee. Banking isn't a right, it's a business. Having said that, I do believe that these overdraft fees should be reasonalbe and proportionate to the amount they have overdrawn. A customer who has overdrawn their account by $500 should be charged a higher fee than somebody who is overdrawn by just a couple of dollars. Another idea I agreed with in the bill was that, "The Senate bill also requires banks to disclose to customers details about how an overdraft charge was incurred and what can be done to fix an account balance on the same day the overdraft fee is charged." That seems fair to me. If you were to overdraw your account, but bring the balance back to good standing on the same business day, the fee should be dropped.
Overall, I think this could be a good piece of legislation. I just wish their next undertaking in the banking world is that of ATM service fees. Those are getting ridiculous!
Overdraft fees are usually lower than a returned check fee, and the implications are usually less severe. I can see the definate benefit of overdraft protection, but I can also see where it has been abused by some banks. I think that overdraft is a good thing, but it definately couldn't hurt have it monitored and slightly regulated to protect consumers from any shady practices.
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