Overdraft protection -- why all the hoopla?

[Benzadmiral]

Both of my banks have sent me scary notices that "Your debit card is CHANGING!!! OMG!!!!"

I've never bounced a check or had an overdraft in my life. Is this stuff really necessary? Why are they so worked up about it, and how do they make a profit? In the unlikely event I do run over and they approve the transaction, they get a fee -- but if I live within my means, what good does it do them?

 

[river_rat]

What? They automatically put OD protection on your checking?
You can usually opt out if you go to the bank.

Now, if they also attached the protection to your savings, if you have that at the same bank--and they usually do that--then you'll want to opt out in writing or move your savings to another bank where they can't get at it.

Otherwise you might as well just move your savings into checking because if someone writes a huge phony check or credit card charge on your checking, it will come out of your savings, too.

 

[javacontour]

Apparently, enough folks don't live within their means and this is a great profit center for banks.

 

[VNTS]

Probably the guvment saving you from yourself, now when bon bon girl momma goes to the store and overdrafts, it will pop up and she can decline the purcahse or know she is going to pay a fee, before it just went thru and she paid the balance and the fee.
THe bad banks were stealing a fee from her even though she was clueless and irresponsible.

Oh banks make profit now by paying squat for interest so you can help finance all the deadbeats who are in over their head on mortgages, credit cars and whatnot LOL

Face it, we now live in a nanny state because the guvment thinks we are all little kids with no brains and every bank, mortgage co, business etc are thieves stealing from us. Cant wait until Nov to change things.

 

[javacontour]

The problem is not only what is suggested above, but also that there are enough who do need "adult supervision" to convince folks that a nanny state is indeed needed.

After all, what wise adult would buy something on credit for 29.99% interest?

It goes both ways. As long as we have folks like this, some will think there needs to be a nanny state. As long as there is a nanny state, there will be more and more folks who prove the need for that nanny state.

It's a never ending cycle, regardless where you fall on the social/political spectrum.

 

[Gary Allan]

Quote:
Oh banks make profit now by paying squat for interest so you can help finance all the deadbeats


You mean the fleas on the dog?

That is, financiers and money changers?

I agree. They can only exist if they can get you to assume more debt ..one way or another.

 

[Benzadmiral]

Originally Posted By: river_rat
What? They automatically put OD protection on your checking?
You can usually opt out if you go to the bank.

Now, if they also attached the protection to your savings, if you have that at the same bank--and they usually do that--then you'll want to opt out in writing or move your savings to another bank where they can't get at it.

Otherwise you might as well just move your savings into checking because if someone writes a huge phony check or credit card charge on your checking, it will come out of your savings, too.

No, my savings are elsewhere. Of course, that bank is also worrying me about this. I think I'll just decline and let it go.

 

[eljefino]

I would start thinking about another bank. This is the first volley in a now-endless cycle to squeeze more blood from you; they think you are content.

 

[eljefino]

Originally Posted By: VNTS

Face it, we now live in a nanny state because the guvment thinks we are all little kids with no brains and every bank, mortgage co, business etc are thieves stealing from us. Cant wait until Nov to change things.


Uhhh, TARP already stole from us, rather handsomely. And it didn't benefit the little people who can't do math and balance checkbooks. Both contenders in Nov '08 supported it.

 

[CivicFan]

Since overdraft protection (sometimes called courtesy pay) is a credit balance situation where the bank allows your deposit account balance fall below zero, the bank basically loans you the money and the debit card turns into a credit card for that transaction. This is probably covered by the credit card reform that went into effect recently.

I got a similar notice but since I only use credit cards, I did not pay much attention to it.

 

[Benzadmiral]

Originally Posted By: eljefino
I would start thinking about another bank. This is the first volley in a now-endless cycle to squeeze more blood from you; they think you are content.

Oh, I have. This one is conveniently located -- even if my car breaks down, I can walk to the ATM outside the compound. I keep just my month-in, month-out operating funds, plus a big margin for emergencies, in there.

The other one is the high-interest checking account that I wrote about two months ago, when they threatened to close my account because I was actually making a profit (all of $20/month) on my money. I pushed back, and haven't heard a peep from them since. I suppose I'll have to go to their website and opt out of this overdraft thing too.

 

[CivicFan]

Originally Posted By: VNTS
Face it, we now live in a nanny state because the guvment thinks we are all little kids with no brains and every bank, mortgage co, business etc are thieves stealing from us. Cant wait until Nov to change things.


Quite a large portion of the population are not very well equipped to deal with the sometimes near-fraudulent business practices of lending organizations.

 

[cchase]

I'll never understand people who rack up credit card debt on multiple cards. Overdraft protection is ridiculous, too.

"Save people from themselves". I'd say no one in power has any faith in the people in this country but a lot of times I think they're on the right track.

 

[1999nick]

Do you have to opt out of this overdraft protection? At my bank, you have to tell them if you wish to continue the overdraft protection. If I were to need the overdraft protection, they would charge me $39 for each instance of overdraft. Inasmuch as I have never needed this protection, I have opted out by not opting in.

 

[ahoier]

Guessing the original poster has Chase (previously WaMu.....) - I got the same letter.

But yea it's something the Government has passed to banks, what it does, is if you don't have available funds in your checking/debit account and swipe your card, it will not let the transaction go through....

What I don't understand is this SHOULD be how it is SUPPOSED to work....DEBIT should only "work" if you have sufficient funds IN the account.....CREDIT works the other way, charge all you want and pay later (just don't go over your credit limit lol).

I'm glad they moved this through.....I told them to activate it...the way I figure, if someone my card/pin gets stolen, the thief won't be able to drain my bank account by buying a $2400 computer if I only have 500$ in my account.

The "old" way, the sale would go through, I'd be charged the 2400$, then the BANK would charge me their overdraft fee (30-45$ usually?) AND the retailer (WM, Circuit City, Best Buy, whatever) would charge me ~25$ for the "returned check"/insufficient funds...

Now say that thief went to a couple other stores.....well, those overdraft fees and insufficient funds fees can add up...

 

[daves87rs]

Eh, I opted...I rarely (only a few times by my own stupidity) gone over my account balance.


I've stopped worrying about the whole stolen card thing, as if they really want it, they will get it. I always watch my accounts now....

 

[VNTS]

Originally Posted By: CivicFan
Since overdraft protection (sometimes called courtesy pay) is a credit balance situation where the bank allows your deposit account balance fall below zero, the bank basically loans you the money and the debit card turns into a credit card for that transaction. This is probably covered by the credit card reform that went into effect recently.

I got a similar notice but since I only use credit cards, I did not pay much attention to it.



That is what I was referring too, they had to send out the notices. Your goverment saving you from yourslef LOL

 

[VNTS]

Originally Posted By: CivicFan
Originally Posted By: VNTS
Face it, we now live in a nanny state because the guvment thinks we are all little kids with no brains and every bank, mortgage co, business etc are thieves stealing from us. Cant wait until Nov to change things.


Quite a large portion of the population are not very well equipped to deal with the sometimes near-fraudulent business practices of lending organizations.


What someone forced you to take a loan?? Or you dont read the terms when you sign up for credit?? Or you cant balance a check book or debit card so you are surprized when they nail you a fee because you were to lazy to look at the balance before your purchase? I guess now the purchase wont go thru at the register unless you choose to?

Expecting people to balance a check book or debit card to know the balance is not a fraudulent business practice in my book. Dave Ramsey laughs at people who expect someone else ie goveremtn to save them from the big bad bank.

 

[Trav]

Must be some new government regulation.Lots of people here got the same letter.

 

[HTSS_TR]

Yes it is a new regulation.

My credit union has very low fee for over-draft protection at $2 each over-draft and interest rate is 9.9% only. With this low fee and interest rate, it is not very prudent to turn down over-draft protection.