An 18-month FDIC survey shows that banks are making $17.5 billion every year on overdraft fees, 74 percent of their service charges, according to USA Today. With most banks, if you overdraw via check, ATM or debit card transactions, you are hit with a fee of about $35 for each purchase. Also, young and low-income people consumers disproportionately incur the fees.
Oh no! shouts the angry mob. How dare they persecute people who are struggling, especially in today's economy! If people overdraw their accounts, it's usually because they have to do so in order to put food on the table. This is just one more case of the big guy exploiting the little guy!
Hold the phone, angry mob. Put down your pitchforks. Don't go lighting your torches just yet. Let's look at what really happens when people overdraw their accounts and receive the resultant fee.
But no! the angry mob protests, The banks make it so hard to track the status of an account, leading to more overdraft fees!
Well, yes, but we know this, so we can take it into account. And most large banks process larger transactions before smaller ones, increasing the likelihood of multiple fees. But the reason for this is so that, as USAToday.com user candice23 so eloquently said: "your mortgage, rent, car payment and grocery bill get paid before your cigarettes and your Slurpees."
What's lacking here isn't a decree from a regulatory body, as others have suggested. It's personal responsibility. Angry mob, you signed a contract of your own free will consenting to overdraft fees. Regardless of the reason for an overdraft, you have to accept fault for the consequences.
Common sense dictates: don't spend money that you don't have. Maybe, just maybe, if the angry mob learns this maxim, it will start to catch on with corporations or the government.
Oh no! shouts the angry mob. How dare they persecute people who are struggling, especially in today's economy! If people overdraw their accounts, it's usually because they have to do so in order to put food on the table. This is just one more case of the big guy exploiting the little guy!
Hold the phone, angry mob. Put down your pitchforks. Don't go lighting your torches just yet. Let's look at what really happens when people overdraw their accounts and receive the resultant fee.
- They are spending money that belongs to the bank, not themselves.
- They are violating the bank's contract--that all involved parties signed-- which explicitly states that doing so will incur a fee.
But no! the angry mob protests, The banks make it so hard to track the status of an account, leading to more overdraft fees!
Well, yes, but we know this, so we can take it into account. And most large banks process larger transactions before smaller ones, increasing the likelihood of multiple fees. But the reason for this is so that, as USAToday.com user candice23 so eloquently said: "your mortgage, rent, car payment and grocery bill get paid before your cigarettes and your Slurpees."
What's lacking here isn't a decree from a regulatory body, as others have suggested. It's personal responsibility. Angry mob, you signed a contract of your own free will consenting to overdraft fees. Regardless of the reason for an overdraft, you have to accept fault for the consequences.
Common sense dictates: don't spend money that you don't have. Maybe, just maybe, if the angry mob learns this maxim, it will start to catch on with corporations or the government.
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