More on overdraft fees
The American Bankers Association has responded to a series of stories appearing in newspapers and elsewhere about the high cost of overdraft fees at many of the nation’s banks. The Oklahoman recently ran a story on the topic.
A survey commission by the association found that 82 percent of bank customers did not pay an overdraft fee in the past year, and that 96 percent of those who did pay a fee were glad the bank covered their check.
“Clearly, consumers who pay overdraft fees are the minority, and that number is shrinking. More importantly, most consumers want banks to pay their overdrafts so they can avoid the inconvenience, embarrassment and potential costs of having a payment or transaction rejected,” said Nessa Feddis, ABA senior federal counsel and retail banking expert.
Feddis said the fees are designed to be “a deterrent,” and that the fees are easily avoided by careful consumers.
However, he doesn’t address the fact that many of the nation’s largest banks charge among the highest fees and some use programs designed to boost those fees by paying larger checks first to deplete accounts and trigger more payments as smaller checks clear. Those fees can make pay-day lenders look like pikers. The FDIC reported that a bank charging a $27 fee to cover a $20 purchase made from an overdrawn account is loaning money at an annual percentage rate of 3,520 percent if paid back in two weeks.
Overdraft fees have become a major revenue source for many banks. Last year, 45 percent of U.S. banks and credit unions made more in overdraft fees than in profits.
The key is to shop around. Some Oklahoma banks charge less than $20 for overdraft protection, and customers generally can opt out of the service.
Don Mecoy
Business Writer
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Yes I’m sure it’s used as a deterrent to anyone that would abuse it. However, what about the time when a retailer or business accidentally charges you twice and then tell you that it’ll take 7-10 days to credit you the amount wrongfully took… So you call the bank and explain the situation because you know that a few more transactions will be posting and there won’t be enough money. The bank says too bad so you end up with over a $100s in over draft fees. There needs to be a way banks can be reasonable about these fees as well.