Easy money by bankers

Discussion in 'Politics, Religion, Social Issues' started by YS2003, Sep 8, 2009.

  1. YS2003 macrumors 68020

    YS2003

    Joined:
    Dec 24, 2004
    Location:
    Finally I have arrived.....
    #1
    An interesting article by the NYT.
    http://www.nytimes.com/2009/09/09/y...-cards/09debit.html?pagewanted=1&ref=business
    I hope the regulations will clamp down on this shady practices to cut off this easy money stream to banks. It seems banks and financial firms want to go for easy money by pulling some tricks on their customers (which seems to follow the general pattern we all witnessed).

    Maybe that is the basic business model they are in as playing with someone else's money does not really produce values in the real life (except for sucking money from the general economy to fatten their own wallets).
     
  2. rhsgolfer33 macrumors 6502a

    Joined:
    Jan 6, 2006
    #2
    Or people could just take responsibility for their own poor spending and banking habits. Its not that hard to figure how much money is in your bank account, if you don't want to pay the overdraft charge then keep track of your account, its pretty simple. If you regulate overdraft fees away from banks they're going to come up with some other way to continue making money, at least overdraft fees are penalties for poor money management and not some flat fee charged to everyone just to have an account.
     
  3. LethalWolfe macrumors G3

    LethalWolfe

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    Jan 11, 2002
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    Los Angeles
    #3
    So you're okay that banks can change the order in which money goes into, and out of, your account to make it more likely that you'll be hit w/an overdraft fee? You're okay that the banks apparently make it very difficult for people to opt-out of this 'plan' and just have their debit card setup to deny the transaction if they don't have sufficient funds? Poor money management is bad and so is a system that is so easily abused.

    This is a bit ridiculous, no?


    Lethal
     
  4. Zombie Acorn macrumors 65816

    Zombie Acorn

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    Feb 2, 2009
    Location:
    Toronto, Ontario
    #4
    The first and last time I overdrafted was my first semester in college and it was by .25 cents. Anyone who has done it should have learned their lesson. Theres no reason the bank should have to cover your overspending without harsh penalty.


    I don't know where they are getting the 3520% from, I have never seen that high of an interest rate charged. In fact at the two banks I do business at you can walk in anytime and pay your overdraft fee ($25) without further penalty as long as you don't write anymore checks (which would obviously incur more fees).
     
  5. LethalWolfe macrumors G3

    LethalWolfe

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    Los Angeles
    #5
    So why don't the banks just not let the transaction go through? Oh, that's right, because if they deny the transaction they can't gouge people on fees. If people want to opt into an over-draft scheme like that I'm fine w/it. But I don't think people should be locked into a scheme like that by default w/little chance of being allowed to opt out of it.


    Lethal
     
  6. Zombie Acorn macrumors 65816

    Zombie Acorn

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    Location:
    Toronto, Ontario
    #6
    $25 dollars would be more than worth my embarrassment of having my card declined in a restaurant/grocery store etc. You used to have to opt-in to these programs and then people got pissed off because their cards were being declined when they went slightly over limit.

    Maybe you should be able to opt-out of it, and I am sure if you talked to the bank manager they would let you (or you could find a new bank that does, money talks louder than words).
     
  7. LethalWolfe macrumors G3

    LethalWolfe

    Joined:
    Jan 11, 2002
    Location:
    Los Angeles
    #7
    I'd rather save the $25-$35 and just put it on a credit card, but to each their own. Or at the very least be given to option to cancel the transaction or continue the transaction understanding that I will incur an overdraft fee. Kinda like how ATMS always alert you to any fees you may be charged and give you the option to cancel or continue. The fact that you get no notification and can unknowingly rack up hundreds of dollars in fees during a day of running errands is BS as well.

    I like the program I signed up for at my bank where if I overdraft my checking account it just goes straight onto my credit card (no penalties or anything). Never had to use it but it's nice not to worry about accidentally overdrafting my account and getting hit w/a fee.


    Lethal
     
  8. Shivetya macrumors 65816

    Joined:
    Jan 16, 2008
    #8
    Uh, don't spend money your not sure you have? Whats so hard about that. If you have to by the old game of paying by check and hoping its not cashed before the balance is there you need to sit down and fix your situation.

    Blaming banks for people having bad financial sense is just silly. Whats next? Blaming insurance companies for charging for premiums before you wreck?
     
  9. rhsgolfer33 macrumors 6502a

    Joined:
    Jan 6, 2006
    #9
    That is certainly not a normal banking practice and if your bank does it I suggest getting a new one. I suspect that this issue is more related to people not understanding how check clearing works than to bankers changing transaction order. Its also why its smart to keep some extra money in your checking account.

    There's nothing saying you have to use a debit card, if people don't understand how a Visa/MasterCard backed debit card works then they shouldn't have one. Last I checked cash was still accepted and preferred by millions of merchants. Every debit card I've ever had or seen is backed by Visa or MasterCard allowing for up to (in my case) a $100 overdraft, I knew it going in, its a very very common practice, and its not difficult to keep from ever having to use that overdraft if you keep track of your account. You can't expect someone else to safeguard you from your own poor banking habits.

    I certainly don't find it ridiculous. Taking something that is charged as a penalty and not charged as interest and then trying to pass it off as something intended to be computed as an interest rate is ridiculous.
     
  10. Capt Crunch macrumors 6502

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    Aug 26, 2001
    Location:
    Cleveland, OH
    #10
    :rolleyes:

    The financial district, by and large, contributes a huge amount to the economy. I would even wager that the industry and their large ability to lend is the single greatest contributor to the high quality of life that we enjoy in the Western world. Moreover, they are not just "playing with someone else's money", they are assuming real risk when they invest, there are real financial consequences for failure (you're also generally fired on your first or second mistake). Finally, the knowledge and effort required to do investment banking is far greater than you seem to imagine. There is a reason the job generally requires a PhD in math or physics and the job is an 80 hour work week.

    EDIT: I should put a caveat before I'm barraged with righteous indignation. Yes, I believe there is badness in the financial sector that needs to be purged. Yes, there should be additional regulation.
     
  11. fivepoint macrumors 65816

    fivepoint

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    Location:
    IOWA
    #11
    I had an overdraft once.

    When I was right out of college I moved to the city and decided I'd get rid of my small hometown bank to go with Wells Fargo instead. It just seemed cool. One day when I was at the mall, I decided I needed to get $50 out of the ATM. It cost me $4 in ATM fees from the ATM to get the cash, but I didn't care.

    A few weeks later I get an overdraft notice from Wells Fargo. No huge deal, I had never done that before, but how bad could it be? Well, I got charged the original $4 in ATM fees, Wells Fargo also charged me $5 for using a non-standard ATM. Then I got charged for the Overdraft which was $25. Ouch. Then the $50 got put on the the 'credit line' attached to my checking account and I got charged again for accessing this feature! When it was all said an done, my fees were almost $50, the amount I had originally wanted to take out.

    Needless to say, as soon as I found out about all of this, I immediately went and shut down my Wells Fargo account and got back in with my local hometown bank.

    Now, you may think the point I'm trying to make here is agreeing withthe OP, but far from it. The important part of this story is that I immediately went and switched accounts. The free market allows me to do this no questions asked. It was MY FAULT for not reading the rules/fees associated with the account. It was MY FAULT for creating the overdraft. It was MY FAULT that I got charged any fees at all. They are welcome to do business any way they wish as long as they inform me as such, which they did. I don't have to like it, and I don't have to stay with them. Their practices were not misleading and they were not prohibiting me from taking my business elsewhere which I promptly did.
     
  12. Counterfit macrumors G3

    Counterfit

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    Aug 20, 2003
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    sitting on your shoulder
    #12
    BoA did that to me. They actually put the overdraft fee BEFORE the withdrawal, which put me under. If they hadn't done it, there would have been no overdraft.
     
  13. Zombie Acorn macrumors 65816

    Zombie Acorn

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    Feb 2, 2009
    Location:
    Toronto, Ontario
    #13
    After my experience with bigger banks I also switched back to my hometown local bank. They are a conservative bank who didn't need a bailout.
     

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