this post was submitted on 17 Jan 2024
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The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.

The change could potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.

Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards.

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[–] wreckedcarzz@lemmy.world 13 points 10 months ago* (last edited 10 months ago) (1 children)

Yeah, I've only wrote a handful of checks in my life, and I always saw straight through the "we offer to fuck you, for your benefit!" bullshit. Decline their "offer" whenever available, the only one who benefits is the bank. If I don't have enough money now, I don't want the transaction to be approved and get fucked with a $35 fee "for my benefit", and I don't want to be hit with a second fee "for my benefit" when that becomes an "extended overdraft" when - now I know this is hard to believe but - if I don't have money on day 1, I'm very likely to not have money on day 5.

Also, back when banks could more openly fuck you with a smile, BofA would process transactions in this order: debits, then credits. This would cause accounts to fall negative for minutes or even seconds as they processed the pending transactions, and BofA raked in fees. I was a very vocal pain in the ass for my local branch managers, and had that bullshit removed each time, but I had the time to go sit in a shitty crowded bank for an hour and bitch at whoever until I got my $35 back. Anyone with a 9-5 would be fucked.

Banks as a profit center can suck my ass. I've been a "member" of about 20 banks, and there are only 4 I like(d), one of which got acquired by a big bank and the fee list quadrupled while the features were slashed. Be very carefully about where you store your money - thieves are often eager to shake your hand.

[–] Rivalarrival@lemmy.today 3 points 10 months ago* (last edited 10 months ago)

Also, back when banks could more openly fuck you with a smile, BofA would process transactions in this order: debits, then credits.

Oh, you've just scratched the surface... It was a truly fucked up algorithm they used.

First, they keep a running balance. This is the number they show you online, at ATMs, etc. this number includes all transactions in chronological order. It is not your available balance.. Your previous day's ending balance is your "available" balance, but they hid that number from you pretty well.

Next, suppose you have a $500 overdraft limit. You deposit $900 on top of a $100 balance, and then go on a $700 shopping spree. If they processed your debits first, they would have to decline your $700 debit, because it exceeds your overdraft limit. Declining the transaction, they don't get to charge an OD fee. If they apply the deposit in chronological order, you'll have plenty of money to cover the debit, so they don't get to charge an OD fee in that situation either. What to do, what to do... Got it! We can add the credit to the overdraft limit! That way the charge can go through now, and we can apply the credit later! So, we don't have a $500 OD limit; with that $900 deposit, we have a $1400 OD limit! That's plenty enough to cover your $700 charge, and let's us tack on a $35 OD fee, too!

Next, they don't just apply debits before credits. They also change the order of your debits.

Suppose you have $500 available. You make 20 $20 purchases ($400 total) and deposit $500 on Friday night. Your balance Monday morning is $100, with another $500 pending. You use your online bill pay to pay your $500 rent on Monday.

On Tuesday morning, you expect your balance will be $100 with $500 pending debits and $500 pending credits. Worst case, your rent payment accrued an OD fee, right?

Wrong. They moved Monday's rent payment to the top of the stack, even though it won't even be mailed out until Wednesday, and won't actually be cashed until Friday at the earliest. $500 off a $500 balance is zero. Now they start counting the 20 transactions you conducted last Friday night, with an OD fee on each and every one.

It wasn't just BOA that did this. It was all major banks, most regional banks, most credit unions. Basically, everyone did it, until they were finally slapped down about 15 years ago. Fuckers.