Most of us have been there, even if we don’t want to admit it.
We go online to check our checking account balance, only to see that dreaded negative.
How? Why? Not possible.
These thoughts and more roll through our heads as we figure out what to do.
That was me about a month ago. Through a rather apparent bumbling of my finances, I thought I had more money than I did, and well, I spent it.
I didn’t spend a lot of it. A Diet Coke here. A cup of coffee there. Topping off my gas tank for a mighty sum of $8. I really didn’t spend all that much money.
My problem, though, is that I swiped my debit card too many times. Way too many times. So what would have been $1.70 Diet Coke turned into a $37.70 Diet Coke. Plus a fair number of other small purchases, which left me significantly in the hole.
It was my fault. But, I figured my bank, National City, would help me out. Hell, I’d been banking there for eight years. I have my student loans through them, my parents mortgage is through them, plus their other accounts.
So I drove to the downtown branch only to be told they couldn’t help me because the account was based at the branch a few blocks away from my house in the suburbs. OK, I thought. That’ll be even better, whoever I talk to there will probably know at least one of my parents.
So after a few phone calls and voicemails, I found out that actually, there was very little they could do. They very politely told me they’d waive a few fees, but I’d have to pay the rest.
So I did. But then I started getting angry. It didn’t cost the bank any money to pay those purchases because I deposited enough to cover those. So the money paid to them in fees was pure profit.
In 2006, U.S. banks made $2 billion off of overdraft fees, according to the Wall Street Journal. That’s billion, with a B.
No wonder they didn’t want to waive the fees. They’re a cash cow.
After a little more research, though, I found that banks are looking at the possibility of losing their precious overdraft fees.
A few weeks ago, a senate committee opened the issue.
And only days later two of the largest banks in the U.S. announced overhauls of overdraft policies.
Starting this month, Bank of America will allow customers to opt-out of overdraft ‘protection.’ Overdraft ‘protection’ is what banks call it when they let you spend money you don’t have. It’s been a long time since banks allowed people to opt-out of this so-called convenience. Chase will do the same, though the exact date isn’t set yet.
Bank of America will also stop charging fees for accounts overdrawn by less than $10 a day. Chase will do the same, but will only allow $5 before fees are tacked on.
The banks will also limit the number of times a day a person can be hit with a fee.
Those are all decent baby steps, but some schmuck, like myself, who forgets to check his balance is still looking at well over $100 a day. Or a few hundred over the course of a few days.
Hopefully these so-called reforms won’t appease Congress, though I have little faith, as it seems anything will appease them these days.
In the meantime, I’ve switched banks (to Chase, actually), signed up for text alerts that will inform me when I’m broke (good thing I have unlimited texting) and will be pouring over my statements each month.
Pat Oldendorf is a junior English major from Lockport. He is the Scout editor-in-chief.
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