Banks Getting Back in the Black With Ridiculous Overdraft Fees
You gotta love banks. They bring the American economy to its knees peddling crap mortgages, only to be bailed-out en masse by the taxpayers, and now they're making a killing by charging customers ridiculous overdraft fees. Yeah.
According to the Financial Times, U.S. banks are set to bring in $38.5-billion in overdraft fees this year, nearly double the amount they collected in overdraft fees in 2000, most of which will be charged to their poorest customers (Surprise!).
The most cash-strapped customers are the hardest hit by such fees, with 90 per cent of overdraft revenues coming from 10 per cent of the 130m checking accounts in the US. Regular use of overdrafts is most common among consumers with low credit scores, Moebs discovered.
Since the billions in bailout cash wasn't enough to cover all of their losses, the median overdraft fee charged by banks rose this year for the first time in 40 years, with the highest fees being charged by the largest banks.
At BofA, a customer overdrawn by as little as $6 could trigger a $35 penalty. If the customer does not realise they have a negative balance and continue spending, they could incur that fee as many as 10 times in a single day, for a total of $350. Failing to repay the overdraft within a few days results in an additional $35 penalty.
And the banks' take on all of this? They're just covering their asses!
Banks say that the fees compensate for the risk they incur when they pay on behalf of customers who do not have enough money in their accounts. "Overdraft fees are there for a reason, we take on a lot of risk," a senior banker said. "It's a service to our customers, they want us to pay their overdrafts."
So what's a poor overdraft fee-addled consumer to do? Write some damn letters to people in high places, which is what one careless Consumerist reader recently did when B of A tried to hit him with $525 in fees.
I just recently moved into a new apartment and had written the check to my landlord on the 30th of May or so. I thought that he had cashed the check and I still had quite a bit of money left over which was great because I had a great many essentials I had to buy for my new/first apartment. Cleaning supplies, shower curtain, rental van etc. Unbeknown to me at the time my new landlord cashed the check on Friday and I was shopping for said essentials at various stores.
All told I ended up with 15 overdraft fees amounting to $525 in fees alone. A hefty sum to be sure.
Being an avid reader of the Consumerist for a couple years or so, I remembered the notion of an executive email carpet bomb (recent article as well). So I set about crafting the email explaining the situation, stating that I have no problems with overdraft fees on large purchases but 37 dollars for a coffee from Dunkin Donuts was a bit much to swallow.
A bit nervous I hit send and began the waiting game, to no avail. Today while at work I received a call from an unknown number, figuring that it was a credit collector hearkening my financial downward spiral I ignored it. They left a message though and curiousity got the best of me. A pleasant man named George from the office of the CEO had left a message notifying me the fees were to be removed and he left a number for me to call. I immediately called after that and spoke to him for about 5 minutes telling me about the notification systems they have available to me and a little bit of light lecturing.
I just checked my account and the fees were indeed returned. Needless to say a large weight has been lifted off of my shoulders.
So you see, there are some happy endings, but they're rare. For more on the effectiveness of the "Executive Email Carpet Bomb," check out the EECB tag on Consumerist.