No, I want to hear the warped logic.
Then again, it may just be: no income for the banks, they go bust, who will provide banking services to poor people? kind of retarded mental gymnastics.
Crux of the argument?
Profit margins are very small on small personal bank accounts. If NSF fees are reduced, how ever will we profit from these tiny accounts?!
One bank made only 49 billion profit last year, up from 48 billion in 2022. Why won’t somebody think of the banks!?
Oh no, anyways credit unions exist and rarely have these issues
Credit unions would actually be impacted far more from this legislation than banks.
They don’t have access to the same cash making options that large banks do, and credit unions are also non profit.
If their fee income was reduced, they would have to make up for it in other areas, such as higher lending rates, which affects more people than overdraft fees.
Personally, I’d rather deal with overdraft fees than have a higher rate for loans. If you learn to bank responsibly overdraft fees won’t be an issue anyway.
Overdraft fees simply wouldnt be an issue if they didnt exist. Theres no reason a transaction shouldnt decline if there are insufficient funds. If you dont have the money then you dont have the money.
Theres no reason a transaction shouldnt decline if there are insufficient funds.
I’ll admit I’m ignorant to banking on a large scale, but the few banks I have used and worked for I’ve always had the option to just decline “overdraft protection” so indeed if I tried to make a $50 purchase and I had $45 in my account, it would just decline. Overdrafting has always been an optional service. Are there banks that force you to enable overdrafting?
Edit: now whether the choice is properly conveyed to people is another matter of course, I imagine many banks make it seem like a “good” thing or the default option.
You are correct it is optional but its defaulted to on then you have to listen to their spiel about how good it is for you before being able to turn it off. Even after you do so though it still doesn’t stop some recurring payments or charges so your account can still end in the negative and you typically get a charge for that if its in the negative enough (usually more than 5-10 dollars)
Yes, I agree that their spiels usually make opting out not seem like an option lol.
But I do what to point out this:
Even after you do so though it still doesn’t stop some recurring payments or charges so your account can still end in the negative and you typically get a charge for that if its in the negative enough (usually more than 5-10 dollars)
If you have not agreed to overdraft protection, they legally cannot charge you a fee if you end up overdrafting from automatic payments or another tricky one is gas pumps where some only charge $1 to initiate the pumping then later hard post the full amount. Now, I’m am sure there are institutions that go against this law but I try to spread the word that Reg E doesn’t allow that practice.
plaintext
These people are far and away the heaviest users of bank overdrafts. The Financial Health Network, a personal finance nonprofit, says the group most likely to overdraft includes “financially vulnerable” households that struggle to pay their bills every month and typically make less than $30,000 a year. Almost half of financially vulnerable households with checking accounts overdrafted in 2022, and of that group, two-thirds overdrafted at least three times, one-third did so six or more times, and one-fifth overdrafted 10 times or more. With an average overdraft fee of $26.61, hundreds of dollars in fees can land on the most cash-strapped customers. Capping those fees — possibly as low as $3 — would be a huge boon to families who really need the help. Who could oppose that?
Well, as with any nice-sounding policy, it’s important to consider the alternatives, both for the customer and for the banker.
For depositors, overdraft fees can be an expensive alternative to even worse options, such as payday loans or having their electricity shut off (and paying a reconnection fee to turn it back on). And “the best of bad alternatives” can also be sort of true for bankers, who must find some way to defray the cost of providing what is basically an unsecured loan to people who are, as we’ve seen, often financially struggling and might be unable to repay the money. The fees also help pay for “free” checking (which costs banks quite a bit of money to provide).
If we cap overdraft fees, how will banks make up the lost revenue?
From profits, you say, and fair enough, but Patrick McKenzie, who writes the Bits About Money newsletter, points out that the reason your bank is so obsessed with getting you to sign up for paperless statements is that the profit margins on checking accounts are so thin, they can be meaningfully improved by saving the cost of 12 stamps a year. “Margins on small bank accounts are very thin,” he wrote recently, and “credit losses can easily be larger than several years of them.”
Now the government wants to make those accounts even less profitable. It seems possible banks would look to limit their losses by getting rid of those customers or making up the revenue somewhere else — or possibly both. This seems to have happened in the past, judging from what we saw when federal regulators preempted some state fee caps in 2001. According to researchers from the New York Fed, the exempted banks both raised overdraft fees and expanded available overdraft credit, while lowering minimum balance requirements. The rate at which checks were returned for insufficient funds declined by 15 percent. And the share of low-income households with a bank account rose by 10 percent, suggesting that minimum balance requirements had kept those households from opening accounts.
That doesn’t mean that no one would benefit from this rule. High overdraft fees can also deter people from opening a bank account, and it’s possible that effect would outweigh any contraction of credit. The financial industry has also changed a lot since 2001, with nonbank alternatives, such as Cash App, that might offer the marginal bank customer a better replacement than an old-fashioned check-cashing store. But there would still likely be winners and losers, and I don’t know whether the former’s gains would outweigh the latter’s losses. I’m not sure the administration does, either.
If we cap overdraft fees, how will banks make up the lost revenue?
Won’t somebody think of the bankers! They hardly make any money at all on your broke ass $16.42 balance account!
it’s only a problem if you see the banks as only a profit source and not as a service.
We had to force corps / government to give us days off, Healthcare, voting, not being slaves, electricity, water, internet… all things they wanted to be products and not services
Yeah, you don’t make a huge amount of money on a service that everyone needs - boo fucking hoo, close the business and get a real job and stop eating avocado toast.
“You start nailing one white banker per week to a big wooden cross, you’re going to see that drug traffic begin to slow down pretty fucking quick.”
What’s this from?
Carlin
Truly one of the dumbest articles that I have seen.
Having any margin at all on a checking account is just gravy for a bank. It is not their primary source of revenue and never has been. Checking accounts are a mechanism to get customers to do business with them. It’s a marketing/advertising program, that has become required in the industry.
Bank’s are only interested in loans and deposits. This is where banks make the bulk of their money.
When it comes to the poorest people in society, they are not depositing much money or taking out loans. Bankers see them as freeloaders on a system designed to draw in people with more money. They can’t outright deny to service them without a marketing disaster so they punish them instead. Taking money from them to help defray the cost of their marketing efforts. Instead of just denying the charge for insufficient funds as they ethically should, they created an elaborate fee system to bleed money from them.
This is why you should always deny the overdraft protection on any checking account. Never let them charge you a fee for a charge they should have rejected.
If banks lose profit, they leave that customer group.
I always wonder why it is like a given that they have to make a certain amount each year or else. What would be so bad if they just made a little less?
I think I killed some brain cells reading this article, but I’m glad you posted it, thank you!
No problem.
Paywalled. Open in incognito.
Their point is that poor people use overdrafting instead of making actual loans. Removing the overdraft revenue from banks would make banks not offer it, making it necessary for poor people to take worse loans.
It’s just an opinion piece and the author admits that it could have other results.
The general concern is if you remove the overdraft fee as a tool, banks will just require a minimum or cancel you.
If financially struggling families can’t even access basic banking, they are further disenfranchised and removed from a stability, and eventually wealth generation
Sounds like a great time to actually bring back postal banking if the “job creators” can’t handle just making “some money” instead of " lots of money" from these accounts.
I’m sure the post office would be glad to have the “some money.”
Well under Obama there was that weird sorta savings account thing they had. I dropped twenty bucks in it just to check it out. They ended the program I think in 2014.
Sounds fine. And unfortunately banks are extremely real job creators. The existence of loaned capital to start business, pay employees and so on are a course of business development.
Ultimately, weather you like them or not, you can’t force a business to work with a given customer, especially if that customer is unreliable or requires more work.
I agree the time of government is to look after people with less/no concern for their profitability, especially when basic well-being and stability are in play.
Yeah you can force a business to work with a customer they don’t want. Go open a restaurant and refuse to serve people based on race, see what happens. We force insurance companies to cover people with massive health problems, companies to make diversity hires, banks to lend money to minorities, buses to take pretty much anyone with a valid ticket, bakers to make gay wedding cakes…
Some how some way the world hasnt collapsed into ruin.
Obviously I’m not discussing a protected class.
As in, protected by law. No law exists currently to protect people with a low balance at a bank.
I more assume “banks will stop offering services if they make less” or “those hard limits teach you to not go below 0” which are dumb
Ugh I feel dirty for reading the article but the argument is your first option: “limit bank profits and they’ll stop doing business with poor people.”
kind of retarded mental gymnastics.
It’s 2024 you know that’s not cool to say dude
I honestly don’t understand who is supposed to be offended by the r-word. Do people actually identify as that and take offense? shouldn’t they be just as offended by any other term that denotes a lack of intelligence?
It’s 2024 I do not need to explain this. Google it or something.
Credit Unions is the answer if anyone actually believed this could even be slightly possible.
Yes. It’s exactly that.
deleted by creator
Under very, very limited circumstances, maybe. Like you need gas to get to work now, get paid tomorrow, and have nothing in your account? Yeah, maybe, but that’s an expensive tank of gas for someone that’s that short on cash.
OTOH, I can’t count the number of times where my former bank processed my paycheck last–even though it went in first–and then hit me with overdraft fees for buying groceries, gas, paying bills, etc. (This was National City Bank; they ended up losing a class action lawsuit about it, but they still made more money from their theft than they had to pay back out.)
IMO, there should be zero overdraft fees; if the money isn’t in your account, the charge is declined. All of this shit should be done in real-time, instead of waiting for a merchant to post at the end of the day. This is the twenty-fucking-second century, and it’s not that goddamn hard.
Upsetting to hear banks don’t get any better a century from now. Good luck to you future man.
What’s funny is that it looked odd when I read it, but I just quickly brushed it off as a “well you don’t see it written often.”
Blud it’s the twenty-first century
I think the real issue is that dudes living in 2124 and overdraft fees are still around.
It seems Lemmy is also still around… so, a little bit of good made it?
You can disable overdraft “protection” at many banks. I disabled it on my account when Commerce Bank got eaten by TD, and they transferred years of withdrawls then deposits to “balance” my account between systems and I was handed a potential few-thousand-dollar overdraft pile. Told them to kiss the fattest part of my ass and disable overdraft immediately.
Ive had overdraft off on my account since i opened it. However theres been a few things that still are allowed. My truck note is one of them, and state/federal/irs stuff im told would likely be allowed too. I once double paid my truck not on accident, and that was a fun trip to the bank to put a stop payment in.
IIRC part of the problem is that merchants don’t necessarily post charges to your account immediately. They place a hold on funds, but it’s not necessarily charged. That’s especially true for buying gas, where the amount you are going to spend isn’t known until after you’re done filling your tank. The way around that is to have to pre-pay for gas.
Or even better, make banks immediately start treating any negative balance as a credit. There can be a low limit, but enforce a low interest rate. For all that banks have done to us, I feel like this is literally the least they can do—and shit, they’d still turn more profit.
This is actually not a terrible idea. Though interest rates in general need to be capped on lines of credit of all varieties. The fact that 45% interest on a credit card is not being brought up on usury charges is insane.
deleted by creator
A couple decades ago I opted out of overdraft protection for this very reason, so the bank would just reject the charges, and then hit me with a $36 fee anyways. Fucking criminals.
Yup, this is how overdraft protection works at my bank too. Like, what costs money in just saying “transaction declined”? It’s not like the banks owe money to themselves on an OD account.
It’s even more fun when they transfer from your savings account to cover the overdraft and charge you the overdraft fee anyways.
I encountered this enough with my CU; after kicking my college-induced points-fueled credit card habit; that I just decided to switch to a fee-free checking account with capital one. Physical branch locations be damned.
I could only tolerate so many multiple $3 charges a day, with no specific notification, for a service (a savings transfer) that would be completely free if I were to initiate it. And then “we can refund up to 3 overdraft charges but you should monitor your accounts more closely”. lol. Keep your $9 and shove it, I shouldn’t have to babysit my fucking credit union to keep their hands out of my pockets as I’m going through a major life transition like this.
Anyways. Capital one’s verification process has been a bit of a headache but I’m currently trusting the process.
Overdraft is optional on every account I’ve had tbh.
It ought to be defaulted to Off.
I’ve turned it off every time but I have to ask every time. They don’t even tell you it’s default to on cause they wanna collect the fees.
Megan McArdle is the dumbest bitch in the world. I refuse to click on anything she writes because her shitty takes don’t deserve views. She’s actually a big part of why I unsubscribed from WaPo (that and the whole neolib vibe) because I want zero of my dollars benefiting her.
I have no desire to read but I bet her argument comes down to “if they don’t have overdraft fees then they will go into deeper debt by overdrafting more and that is worse somehow”
All the extra debt they get could have been bank fees, why don’t you think of the starving CEO’s, else they can’t afford their Beluga Caviar and Dom Pérignon dinners.
Usually the defense behind banks ‘allowing’ overdrafting is that surely you wouldn’t want to miss paying a bill because your paycheck hasn’t landed yet. So the argument here would probably be if you cap overdraft fees, then banks won’t allow overdrafting anymore and then poor families will have their electricity shut off and get evicted.
So the argument is essentially if the poor don’t have overdraft fees, someone else like the middle class will have more fees?
I cancelled my wapo subscription over similar. Glad to be rid of them honestly.
Megan McArdle is the dumbest bitch in the world.
Grandma Lauren Boebert exists, you know
You know what, let’s just go ahead and say there are many, many dumb bitches (men included) in the Republican party who are constantly fighting for the crown.
Checked what else she has written, the next article along was seriously “How far should we be willing to go to silence Nazis?”
She’s worried that if Nazi’s can’t have their free speech then they’ll come for the white supremacists who don’t identify as Nazis next…and that apparently sets a very dangerous precedent!!
First they came for the Nazis, and I didn’t speak up, for I wasn’t a Nazi.
Then they came for the white nationalists, and I didn’t speak up for I wasn’t a white nationalist.
Then they came for the fascist insurrectionists, and I didn’t speak up for I wasn’t a fascist insurrectionist.
Then noone came for me because I wasn’t a fucking monster, and by that time, there was no monsters left to whine about culture war bullshit.
Then the country was pretty damn great, actually, and we enjoyed our new found freedom and age of equality and prosperity.
When we start rounding up nazi’s and white supremacists, I will absolutely speak up! I will be waving flags and walking the street. I will be shouting and going to gatherings where people will be shouting. And the shouting will sound something like “woohoo!”
The “slippery slope” logical fallacy. A classic tool in the braindead conservative debate kit.
I kinda of get where the concern comes from and I am very much not a conservative.
My concern with censorship is that if we instrument a legal way for the government to force media (social or otherwise) to suppress a point of view, that it will be later used against us.
It’s great if we want to silence Nazis, but I feel that the US is dangerously close to being taken over by Nazis! I think Trump has a legit chance of winning (hopefully he is not allowed to run based on the insurrection clause) and I can definitely see GOP getting legislative majority too. I don’t like to think about a MAGA controlled government having the ability to control the discourse of the people…
But obviously, things would be better without all the hate and disinformation being spread like it currently is. MAGA and qanon and all that authoritarian bullshit really is like a mind virus…
I dont have a solution, but I don’t think censorship is worth the risk. I guess all we can do is continue to socially stigmatize hateful speech and disinformation.
My concern with censorship is that if we instrument a legal way for the government to force media (social or otherwise) to suppress a point of view, that it will be later used against us.
It absolutely will. Any mechanism of authority will be abused later for things unrelated to its original purpose. We need to undo authoritarian control and spend all that money on education then stand back let society decide on its own without coercion. Think of this.
At one time the government felt the need to do something about actual snake oil salesmen. And conservatives at the time were like “It’s crazy to let the government tell you what to eat drink.” But progressives were like “No we gotta put people in jail.” Fast forward less than 100 years and large segments of the population become disenfranchised for smoking a dry plant in private on their own land.
Everything the FDA does should be about providing information, education, recommendation, grading purity and so on. “This soda contains 5 mg of cocaine as certified by the FDA inspection.” And starting in fifth grade every kid gets fact-based info on what drugs do.
The solution to absolute free speech is mandatory and repeated education on critical thinking, logical fallacies, propaganda techniques and cognitive biases. I recall propaganda techniques being discussed in fifth grade in the mid 70s.
No, it’s not inherently a fallacy. Case in point, the Patriot Act and everything that followed.
Yes, it can be used to support idiotic arguments like that legalizing gay marriage will lead to beastiality, or anything that Megan McArdle will use it to support, but it shouldn’t be automatically dismissed as an invalid concern.
Has anyone stopped to consider that maybe she’s just a ragebait shill? and everyone angry about her and talking about her are doing exactly as she intended. Occupying your brain space and wasting your time, distracting you from a million more important things you could be doing.
Even if that’s true, she should be posting on 4chan not Washington Post.
Exactly. That’s why I say she’s a shill. Shills earn good money from some invisible upper authority to write this shit. For example David Icke is another shill of a different flavor.
This is a weird topic, because on the one hand, they have every right to speak and assemble, no matter how much we like it. Even the ACLU took on a case defending the American Nazi Party and their right to assemble and march. It truly is a right which the government cannot have any say in who it applies to. I won’t go into any bullshit argument that they’ll go after other people next, but it’s a right that needs to apply to everyone.
However, that only applies to the government. Everyone else can and should tell them to go fuck themselves and corporations can ban their asses from every service online. They don’t have any right to having their voices amplified online or any other service.
If you support rights you end up spending your entire life defending the worse example of those rights put to use.
You know, if AT&T starts shutting off phone service to people who repeatedly talk about how Hitler made good points, I won’t lose any sleep over it. If I know better than to talk about how burning down billboards is based via SMS, then nazis should know better than to talk about how cool Hitler was.
I also love how she says that “conservative Christians” are being targeted too, and the two links she provides are about a church that “offers help to people who want to move away from same-sex attraction or behaviours,” aka conversion therapy, aka a practice that’s been proven ineffective and harmful, and a story about Vanco dropping the Ruth Institute for “promoting hate.” But they don’t promote hate! All they do (literally all they do) is try to destroy the rights of LGBT folks! You name something the LGBT community likes, the Ruth Institute has probably spent time and energy fighting against it.
If conservative Christians are all like the Ruth Institute and Core Issues Trust, then I say cancel em all.
Megan is a national treasure.
You can always count on her to selflessly use her to name to publish the most absurdly dog shit arguments to defend corporations and the powerful.
She’s also pretty dumb.
She’s also pretty dumb.
is she or does she just know where her paycheck is coming from?
That’s a question you’d only ask if you haven’t read any of her writing…
Might I suggest starting with her pieces on The Handmaid’s Tale, the Grenfell Tower Fire, and anything to do with kitchenware.
If banks are funded by the government (ongoing bailouts and ridiculously beneficial laws for them) then they should be considered a public service and available to everyone, at least at a basic level
Post Office bank when?
There’s already the national treasury, it’s why Aaron Burr killed Alexander Hamilton, he thought creating it created the exact same system that England had set up and was the whole reason we fought the revolutionary war. Aron Burr said that the creation of that bank made Alexander Hamilton the first real traitor to the US. Your just not rich enough to use the National Treasury as a bank.
Dude, Andrew Jackson dissolved the central bank that Hamilton started. The US wouldn’t have a central bank again until the foundation of the Federal Reserve in 1918. Like, did you start this conspiracy after listening to Hamilton?
And the national treasury is something entirely different than the central bank that Hamilton established.
It did in the early 1900s to about late 1960s. It was killed because some banking lobbyist killed it.
I agree. The moment they took a bailout is the moment they became a public utility.
If we cap overdraft fees, how will banks make up the lost revenue?
Get in the fucking sea.
I wonder if banks could try lending money to companies and charging a fee for this service. Like some sorta investing + banking system. Hmmm
Something something most of Europe does not allow you to overdraft your account and people get by just fine something
But clearly you guys have less freedom than Americans, because that’s what American TV told me.
That heavily depends on the country, but in general you have to ask for permission rather than forgiveness.
A lot of US banks also have that as an option, people opt in to “overdraft protection” anyway. The banks make it sound like a safer option, instead of the predatory practice it normally is.
I’ve had them turn it off, and then one day they just… Did it again. Bastards don’t even respect that because they think they know better.
Many banks straight up do not allow you to turn off overdraft protection. The bank I had before moving to a credit union did that.
I don’t see the issue with overdrafting, just why the hell do you guys have a flat fee for it instead of just exorbitant interest rates? Even 50% interest doesn’t cost much if it’s for overdrafting a few hundred for 3 days because i lost track of how much money is in my main bank account.
The one time overdrafting cost me anything close to significant money is when I thought my account had overdrafting allowed but then my bank reverted a transaction because apparently all previous instances were just them “tolerating it”. My PC died and I wanted a new one asap, but the money for that was on my savings account, so I figured I’d just go to like -300 for 1 or 2 days. Nope, bank takes the money back, amazon makes me pay like 20€ of fees, and I have to deal with the bureaucracy of it all. At least I got my PC parts quickly anyway.
Overdrafting with a sane system is just even more expensive credit card debt.
people get by just fine
debatable but otherwise the point stands.
Yeah stop talking about corpos like they’re forces of nature or phenomena . “Oh if the bank no money then no loans or whatever” nah that’s a choice. Made by people. People with cars that can be keyed. Allegedly.
Megan McFuckwit should probably shut the fuck up, the class traitor.
Haven’t heard that term in a while.
There’s always some sheltered, rich, idiot, on the Internet who will argue against literally anything.
No, dummy, let me tell you why that’s a stupid observa- oh wait, I’m not sheltered or rich!
You’re absolutely right though, but in some cases I’m sure it’s a “journalist” who wants a quick check and will argue whatever stance their “benefactor” wants them to argue. Disgusting people with no moral compass.
I mean, the real issue is wealth inequality…
Instead of trying to fix all the different symptoms, we should fix the underlying problem causing them all
But I doubt that’s what the article is saying.
Obv the banks can fuck off, but I do seriously worry that we’ll see a response from banks regarding this, and it will probably be an increase in banks requiring your account to hold a minimum balance. They’re both pretty bad, so I’m not sure which is worse, but larger minimum balance requirements could push some people out of reach of a local bank account.
Being real a lot of people are skipping banks and just loading up visa gift cards and using those to buy stuff.
Most jobs require a bank account for direct deposit these days. Even pay cards are falling out of fashion. I spent a year working at a restaurant with a “i hate all taxes” libertarian owner and he still required all employees to set up a direct deposit. It keeps the books clean enough that any IRS audits wont come back demanding more money.
They’re skipping banks by using a ratshit solution that charges them between a flat $5 or 3% every month in fees…
Okay.
well, duh. Your Bank will just stop allowing you to overdraft, declining your Transactions.
I have never ever had a transaction that overdrafted where I was happy they didn’t just decline it. Zero desire to pay $38 for the “convenience” when I could have just used a different card.
I’ve asked my bank to not allow it on my account at all and they told me NO, they can’t do that, because it’s “a service we provide our customers for their convenience”. Right. I don’t want that convenience, dicks.
Goooood! No more free money from broke people. Go get a court to force them to pay!
