I found this opinion piece from Newsweek and I kind of agree with the author. It's about time banks stopped getting blamed for customers trying to use money that isn't in their accounts.
The article talks about how there has been a lot of negative media attention given to banks and the overdraft fees they charge. The fees are portrayed as unfair and it's implied that banks are preying on poor, unsuspecting Americans with those fees.
Congress has expressed anger over these charges and intends to do something about it. They have already introduced legislation intended to force these banks into charging lower fees or possibly none at all in some situations. The banks are starting to cave, with some already lowering fees or not charging at all if the overdraft is under a certain amount.
Many people are criticizing banks for charging overdraft fees, claiming that banks only prey on poor people. The author presents the following point and I agree with him. The only people group that banks are targeting is the group of people who spend money they don't have. Credit card companies react in much the same way when you reach your credit limit. You have only a certain amount to use and you should plan for that.
The article suggests that we seem to have forgotten whose fault it really is when we spend money we don't have. Ours. Banks aren't there to babysit us.
I agree with this article one hundred percent. I do think that there are banks that haven't used the best judgement in making loans. That's become blatantly obvious in the last few years. But I believe that customers should take resposibility for overdrawing their accounts.
Working in a bank, I talk to people all the time about the fees we've charged them for spending what they don't have. Our bank is actually a little more lenient as far as overdrafts go. Our normal fee of $20 is a little lower than a lot of other banks and we don't assess that fee until it's 6 p.m. and no deposit was made to cover the overdraft.
Even though we do try to make things a little easier, there are still people who are convinced that we're out to get them and they are the only customer being targeted with the fees.
I do agree with the author when he says that we have become a "nanny state" where everyone should be coddled and pampered, every child is gifted and talented and we shouldn't be expected to pay for our mistakes.
I love my job, but it is frustrating sometimes. We have customers every now and then who rant and rave about how we shouldn't charge those fees because they just made an itsy-bitsy mistake and the federal bailout money that so many banks recieved should be used instead.
I want to explain that our bank refused that money because we're fine on our own. We haven't made poor decisions that led other banks to have to beg money from the government. What started out as a small community bank 30 years ago now has over 20 percent of the business in Jasper and Newton counties. It didn't get that way by waiving fees for every customer who spent money that wasn't there.
I don't say all of that because I do like my job and I'd like to keep it.
Really, though I don't understand this sense of entitlement that our country has developed. The way I see it, if I overdraw my checking account that's my own fault and I expect to pay back what I owe the bank. I would be embarrased to make a fuss and blame the bank for my mistake.
I hope that some of this proposed legislation that blames the banks for customer mistakes isn't passed. Why punish the bank when it's generally the customer's fault that they overdraft?
What I see happening is this: Banks can't charge these fees (which they are totally justified in doing) so the customer thinks, "Hey, there's no penalty for spending what I don't really have. That's basically free money right?" This is going to result in charged off accounts galore. How does that help the poor customer? They learn nothing and have a pretty blemish on their credit report.
Basically I think it's time more people learned to be financially responsible. Work with what we have, not what we can weasel out of the bank.
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I agree that people need to be more responsible with their money. Me and my wife pay cash for everything and are lucky to not be into debt. We have been fortunate to be able to save in the past which allows us to do this. My little brother opened an account a few years ago and was awarded a $400 overdraft limit immediately. No banking history or credit history. It didn't take him long to know to hit an ATM and just withdraw $400 at once vs. using the card multiple times if his funds were low..Can you guess what happened? Closed account and his paycheck garnished. Lesson learned. I wish bank though would not award an immeadiate overdraft limit. I know they make money from the fees and they are in the business to make money but at least wait about six months and see if the person is responsible.
ReplyDeleteI agree that banks shouldn't offer the overdraft limit right away. Our bank is one that does to a lot of people and that's one thing I don't agree with them on. It has resulted in several charged off accounts.
ReplyDeleteI think it's a good idea to let the customer prove they can handle their money responsibly first.
I am a little torn on this article. Some banks offer the overdaraft as soon as you open an account. But other banks you have to sign up for it or request to be on your account. But rather you have it on your account or not you still get charged the over draft fee. So what is the point in having it on there if you get charged the fee anyway. I do agree there are people out there that see it as free money. My bank, you have to have direct deposit and you have to deposit a certain amount or more in a 30 day period for 3 months and then you qualify for it. I definetly agree with the waiting period.
ReplyDeleteThe way it works at our bank is this. If something hits your account and you don't have enough to cover it, it will either be returned and you have to worry about it coming back again or if you have overdraft protection it will be paid, but there's a fee since the bank is essentially paying it for you. The fee for a returned item is the same as the fee for a paid one, so you'll be charged that fee either way, but your payment or check or whatever it is will be taken care of if you have overdraft protection.
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