The Traps Of Banks

One thing that has drove me crazy is dealing with banks and the fees they pin for everything you do. I have talked to others about this before and found that I'm not the only one who has had this kind of trouble. It turns out that overdraft protection programs are mostly a way for banks to get money. The American Bankers Association says that courtesy overdrafts started because many customers wanted them. (Courtesy overdraft protection is the one that the bank automatically signs you up for, simply by linking your checking account to your savings or a line of credit.) Kevin St. Pierre, a senior banking analyst, says, "We think that bounced check fees or insufficient fund fees were $11 billion in 2004 out of $35 billion in total service deposit service charges." Now that's a big figure. What the banks are doing here is completely legal and very profitable. They make a killing on fees and the simple mistakes people make. Which is one reason why now I do my banking at a credit union.

1 comment:

Dr. Tufte said...

I'm not happy about this either (I've gotten a lot more careless since kids started turning my time to balance my checkbook into time to read Goodnight Moon).

I wonder how much of this is actually a money issue.

Banks are in the business of making sure that the practice of writing checks works and can be trusted. Every bounced check is a hit on the system. For example, I moved from Alabama to Utah to Louisiana over the space of 1991-1993. Utah was the only place where checks were widely accepted. The others required a lot more ID, suggesting that their bounced check fees were not high enough.