In 2020 banks charged $30,000,000,000 in fees. That’s 30 BILLION dollars! By comparison all Hollywood movies make about $11 billion total!
So, for every dollar Americans spent on going to the movies, they spent three on account fees, over draft fees etc.
Banks answer to their share holders. Share holders like money, so banks charge fees.
Bank is a four-letter word.
Do something about the problem. Take away their ability to steal money from people that don’t have it.
Switch to a credit union. Lower or zero fees. Credit unions answer to their members, I.e. account holders.
What does bank being a four letter word have to do with it?
“four letter word” is an euphemism for implying something is profanity, akin to words like shit or fuck.
And example would be the fantastic CAKE song, Friend Is a Four Letter Word
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All four letter words, you monster
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You banker! I mean it’s only one letter.
If you like that, you’re going to love the next bit:
- Banks create their own money when they make loans.
Surely, I must be ill informed, right?! Nope. Here’s a paper from none other than the Bank Of England: Money Creation In The Modern Economy.
Having a Banking License is like having your very own digital “money printing machine”: they can’t actually print currency (notes and coins) but since most modern money is only 0s and 1s in computers (specifically, amount values associated with client accounts) they can create money like that - basically credit X money to a client account when they loan money and at the same time debit X money from a special account which needs not have that money - and do it again and again untill they hit the certain reserve criteria.
Yes, at the end of the loan period all this gets (or will have during the life of the loan) unwound - the customer pays the principal of the loan, so the bank debits X money from the client account and credits X money to that special account, so everything is properly back to zeros in accounting terms on that special account - all of which would’ve been as if nothing happenned but … the bank gets interest and keeps.
That’s right, banks get paid interest on money that has never existed, and that interest does have to be created as wealth by the broader Economy, which has massive implications in terms of just how big a share of the wealth produced by the whole Economy banks capture because they can create money out of thin air.
It’s not by chance that in the last 2 decades banks have pushed really hard for people to pay everything by card: as long as the money stays digital banks can make money like this to their heart’s content (limited only by the reserve criteria) without having to procure notes and coins.
It’s also not by chance that in the last 2 decades banks have also pushed really hard for people and companies to become ever more indebted, for the obvious reason that the more money banks create out of thin air as loans the more interest they receive from those loans of made up money.
As for reserve criteria, banks need to have a certain fraction of all the money the loaned out as reserve but last I checked those details (at the time MIFid 3 came out) the so-called “sophisticated banks” with advanced financial modeling tools had the possibility to go as low as 2% - which means 98% of the money they loan is created by them out of thin air.
In practice and if I remember it correctly, around 94% if all money in circulation is created this way.
I actually had more fees when with a credit union. Iirc they wanted $3 to issue a cashier’s check - the bank I was with charged $5 for a cashier’s check… after you had used the free one they allowed each month.
The bank also honored my request to decline charges that would overdraft my account. They don’t charge for declining these charges. The credit union ignored my choice on that and charged overdraft fees without any notification to me that my checking account was negative (I had money that was in a savings account linked to the checking, I had just forgotten to transfer after getting paid). So I think ymmv for the quality of banks and credit unions.
I’m curious to learn more about how shit banks are and how much better credit unions are.
Or are credit unions the only alternative?
Is that 11 billion per year? Is that all banks worldwide or is it isolated in some way? Is 11 billion with Hollywood accounting or real earnings? What does movie revenue(?) have to do with bank fees? How does the 30 billion in fees compare to banana revenue?
One time my bank did this to me. So I went to the bank and closed my account. The manager asked why. I told him obviously I can’t afford to have a bank account. I can still see the look on his face.
And another thing were Europeans are better. Paying “fines” for overdrawing your banking account are illegal as are “fines” for failed withdrawals. We had them in the past for a while but the courts smashed that scheme to pieces. On the other hand, often banks do not even allow overdrawing. You hit Zero? End of the Line. Good Customers often get a credit up to some thousand Euro. I have specifically asked to limit my credit frame to €100. Because even while I don’t pay a fine for “overdrawing” I still pay absurde interest rates for overcharging - around 0,03% per day = 12,5% per year.
Then there is another thing, two of the five largest banks for end users in Germany are “cooperative banks” which means they are not allowed to make a profit. They are practically owned by their customers. They aren’t exactly “the banks with the best interest rates” but overall a lot more relaxed than the competitors. On the other hand… they don’t accept every customer. Mostly small businesses and farmers.
Also all banks are forced to cooperate a lot more than US banks which is why credit cards and their often absurd costs are mostly unknown around here.
Edit, I just checked if my bank also offers to refill my daily account from my other accounts if it reaches Zero… in fact it DOES. For Free.
The final nail in the coffin for me was when Bank of America not only charged an overdraft fee for each insufficient charge, they arranged the order highest to lowest coming out that day to maximize the potential fees.
My credit union will also charge a fee for an overdraft. One penny if I can get money in that day to cover it, and they give me a warning so I can do just that.
That was the exact reason I left BoA and joined a credit union. Plenty of other good reasons to do it, but that actually got me motivated enough to make a switch.
Wells Fargo perfected this stacking ruse.
As did Chase
Yeah, I believe it. Who’s going to turn down grifting the Middle class.
I feel like there was also a plan in place that they make a nice stack against your account on a Friday. You wouldn’t be able to do anything to prevent it happening after hours. I may be mistaken but it was hard to keep up with how shady Wells Fargo was in the early ninties.
What I’ve gathered from the comments here, simply equates to:
Banks are for people with more money than sense, or people wealthy enough to have significant investments and passive income.
If that’s not you, go for a credit union, who will be more compassionate to people who may be struggling financially and/or living paycheque to paycheque.
I use a bank because I’m fairly dumb, and also, the bank made it easy for me, with appropriate documentation to create/manage/access my father’s funds when he became unable to do it himself. The credit union he used was nearly impossible to work with, and once they found out we had been logging into his online banking to pay his bills because he couldn’t remember to do it, they locked out his online access citing that “only the cardholder is allowed to use the online banking system”. To get it unlocked we had to take my father, who was going senile and either already had, or would shortly have a confirmed Alzheimer’s diagnosis, down to the bank to have it unlocked. Through the entire process, he didn’t understand what was happening, but he was able to sign the paperwork, so the bank accepted that; what’s ridiculous about the encounter is that the documentation I had, which was power of attorney for assets, was scoffed at, despite being a legal document, signed, dated, with witnesses. They tossed that out without much more than a glance. So once we got the account unlocked, I started a new account at a new bank in his name as a trust account (for him, administrated by me, his legal power of attorney), and we promptly moved all his bills, and all his money to it.
We maintained that account because we couldn’t close it. The reason? If you guessed “only the account holder can do that” then you win. We left about $10 in the account and ignored it for several years until my father passed away, we then did the rounds to the banks with the death certificate, closing all the accounts… Unfortunately, he had a handwritten will which they also rejected, so after about 8-10 months of working with a lawyer to get the will certified by the court and have the court appoint my brother as executor, we were finally able to resolve all the banking mayhem that plagued us for the better part of a decade as my father lost his mind. He spent the last few years of his life getting some of the best care available, and about a year after he died, my SO changed jobs (she works in long term care) to that same facility and can confirm, it’s one of the best she’s ever worked at. It’s comforting to know that despite us being put through the ringer by the banks for no good reason, at least he got the care he needed and deserved in the end.
I still miss him and his weird unhelpful advice. I hope he rests in peace.
I had a Navy Federal Credit Union account that had a $500 line of credit overdraft protection. I never used it but I know plenty who did.
Not murican.
How the flying fuck is it even possible to overdraft over there? Here where I live banks will auto reject any attempt to go over your limit without explicit requests.
Because banks have kept antiquated policies that go back to a time before computers for no other reason other than that it makes them a lot of money. At some point in history your bank account ledger would have been kept hand written on paper that folded out to what they called (get this) a spreadsheet. Each ledger would have been kept at the single branch where the account was opened. Another branch across town would have no idea what your balance was so they would have to accept charges before physically mailing it to your local branch for processing. If the payment didn’t clear but the bank had already paid on your behalf then it made sense to charge a fine.
These days literally the only reason for a bank to let an account overdraw is because it makes them a lot of money. They don’t care that they are getting rich off of the poorest among us. In my eyes they’re no better than sleazy payday loan centers.not even the 2008 crisis did ANYTHING to change banks. pathetic
Funny fact: As an US citizen it is INCREDIBLE HARD to open a foreign banking account. My local German bank simply rejects ALL US customers except when they want to invest a million or more. Because the paper work is HORRIBLE. I on the other hand can easily open a banking account in Finland, Spain, Great Britain or Greece. With some limitations even in Canada, Japan and Mexiko. For an US citizen: End Boss Level. Some even have fantastic service and interest rates.
US citizens have to report all foreign accounts for tax purposes, and the foreign banks are ALSO required to file statements about the US citizens’ accounts. I can understand why the banks see this as a burden and resist US customers
The same is true within the EU countries. But as far as I know the US also demands “real time access without notice to the bakn or owner of the account” and that is something which simply isn’t allowed within the EU. An US citizen can in theory agree to this but then only a few banks even have the technical framework to offer such an access.
Within the EU the police can also request banking data but need a signed court order and the data isn’t delivered in real time and by the bank itself and the customer gets informed afterwards.
Conservative thinking: You should have complied with the bank then there wouldn’t be a problem
How do you overdraw? Shouldn’t the payment just not go through if you don’t have enough money?
I’ve actually tried to have the bank, on multiple occasions, cut me off when my balance hit zero.
They refused. But I can link it to my savings so they can charge me $5 to transfer $100 from my savings to prevent the $35 overdraft fee. No, they won’t alert you when they are transferring it. Yes, they will keep perform multiple transfers until you deposit more money / your savings runs out.
I know the banks need to make money, but aren’t there any legitimate ways they could do so without screwing people over in the process.
I know the banks need to make money, but aren’t there any legitimate ways they could do so without screwing people over in the process.
Oh there are. They make so much money before they extort their customers. You see, banks make their money by investing the cash that’s deposited in them. They don’t have to have liquid cash available for all of the funds for every single customer. They just have to have enough to cover their average daily withdrawal amount bank wide, which is a fraction of their total value.
The rest of their money goes into avenues specialized in making money off of money, eg., investing.
On top of that, banks are typically insured for money that they may not have, just incase they reach the limit of what they need vs what they have on hand. For amounts large enough per customer, that’s a government insurance called FDIC.
So yes, they do have a legitimate way to make money, and it’s the same way that banks have made money since the very first bank came into existence. They invest. But you know, capitalism demands that they ever increase they’re profit margin. So not only are they making money by investing huge, unfathomable amounts of money and making the interest back, but they also have to squeeze their customers like ripe lemons to appease their own investors.
Yeah, that pisses me off. As part of getting my kids started on you’d financial habits, they really needed to not afford what they can not afford (especially while they’re at home so there’s no real consequences)
At most banks the ability to overdraw when you swipe your debit card is allowed on an opt-in basis. At many banks the default option is to allow the customer to overdraw with their debit card. At most banks the language around being allowed to overdraw in your account contract is intentionally confusing. You can usually change this selection online or in you bank app, but if you’re confused call the help line on the back of your card. I don’t advise going in to a branch, as the branch bankers are the ones with the incentive to get your money, the call centers actually don’t care as much since the credit goes to the branches performance metrics.
At ALL banks certain payments will always be able to overdraw your account REGARDLESS of your opt-in/out selection. These are recurring payments for things like gym memberships or Netflix, paper checks, and many other forms of ACH payment.
An important note: this specifically affects checking/savings accounts and their DEBIT cards. CREDIT cards are different.
Source: Used to work in a bank branch and had to work my ass off every time I opened an account to ensure that people were aware of how and when they could overdraw bc banks want to steal your money and that’s not cool.
Well, you see, you’ve opted-in to a service where, to save you the embarrassment of not being able to pay for something, the bank charges you $35. I’m sure it’s in the fine print somewhere. /s
TBH, though, my bank lets me opt-out of it. They also let me tie in my savings account, so if I would overdraw my checking account instead they move money from savings and send me a note.
opt-out is bs. all things should be opt in if they are not gratis.
I’m not gonna defend banks very often, but in fairness, it’s opt-out because most people prefer a $35 fee to having a payment rejected. There’s multiple reasons for that:
- Payment Rejection or “returned check” fees usually exceed $35 and have worse consequences
- They don’t always know whether you’re about to spend more or less than you have until they’ve committed to pay that for you. Most people would not prefer they reject all holds at places like gas stations just because you don’t have enough money on hand to cover the maximum.
- Emergencies are just that. If you keep a perfect checkbook (lol), then you’re overdrafting because whatever is happening to you is worse than the $35 overdraft fee.
Now to put on my “but fuck banks” hat:
The REAL problem, IMO, is that the fee amounts to usury and should be regulated like any other debt. In most cases, your overdraft is equivalent to thousands of percent interest on the overdraft amount. Some “more honest” banks will limit your fee to the total amount overdrawn, making only 100% in fees (still over 36,000% effective APR if it’s all reconciled the next day). A few banks have come up with “small overdraft forgiveness” where they’ll just bloody not charge you a $35 fee over a dollar or two (like the guy in another thread has). But the DDA/overdraft market is so badly regulated, they can basically do whatever they want and then can collude to keep you from opening a bank account with another bank.
I don’t know if that’s really true anymore. It certainly used to be true that this was a service when the fees were rare and consequences serious but this is another case of enshittification where the fees became a profit center so banks changed policies to charge more of them
That I’m on board with. I worked IT at a company that processed overdraft debt and it was a breeze because the Banks have disgusting amounts of leverage against the poor customer.
But I also think this is a case of “we don’t care about the poor people, even enough to come up with ideas to hurt them”. They came up with this process that works well for middle-class and provides reliable profits, and they won’t actually look into the fact that it fucks with poor people because they don’t care. A few banks were giving my previous employer up 40% of their overdraft revenue to collection companies for years without a second thought. It’s not a lot of money for them, but it’s profits and they don’t care to change what makes money. And for most lower-middle-class folks, a rare fee because a bill doesn’t quite overlap with a paycheck is “better than being SOL”
as long as they don’t charge a fee every time that ‘overdraw protection’ is triggered like some banks.
Oh, they don’t charge me anything to cover my overdraft with my own money. It’s kinda nice.
One time I accidentally overcharged my debit account, so the bank charged an overdraft fee, which they attempted to withdraw from my debit account (without my consent), which caused another overdraft fee.
I now use a Credit Union. Fuck banks.
You have repeat customers for life until you piss them off.
I had a US Bank account for 15 years from when I was in college. They set up shop on college campuses to target kids who might not have the best habits.
One day I was transferring money to a friend and hit an extra zero. I muscle memory tapped through the confirmations and immediately realized my mistake.
Couldn’t cancel or stop it in any way.
I called the bank the next day. I asked for forgiveness. The rep transparently told me that since I admitted it was my mistake and not the fault of the app that he couldn’t forgive the overdraft fee. After a half hour of escalations they told me “as a one time courtesy” they would credit the fee.
I was pretty pissed off with how much resistance I got over a mistake that happened for the first time in over 15 years.
Alliant Credit Union is online only. They pay interest on checking and savings accounts. They automatically withdraw from savings to avoid overdrafts, but I think their fee policy is a lot more lax if not nonexistent. They have access to two huge ATM networks and a lot of them accept cash deposits. They cover up to something like $20 or $40 in out of network ATM fees (I’ve never used this) so my understanding is if you only use ATMs a few times a month then they’re all free. Great customer service over the phone too.
Been with them for 5 years and have been way happier than US Bank. Regret not switching sooner. Don’t do mortgages or credit with them though, every org has their strengths and weaknesses.
Bigger picture, I’m most frustrated at how shitty the banking industry is, or perhaps finance in general, and how unregulated it is, causing folks to have such wildly different experiences with places like US Bank and Alliant Credit Union without even knowing their options just because they didn’t do research. It should be regulated enough that the difference in outcome isn’t so drastic
Kind of glad my bank doesn’t let me overdraw
During college I had a local bank account mainly used just to buy stuff I needed during those two years I lived in a small ass college town.
Right before graduating my account was low since I wasn’t adding more cash to that bank. A subscription I thought I canceled ended up charging me $35 more than I had in my bank account. The bank workers told me on the phone not to worry about it since I have overdraft protection and I can just cancel the purchase later with no charge.
They lied and I ended up getting charged an extra $35 for going over my balance. Still fucking hate that bank for making me deal with this during finals. Once the subscription was cancelled I still was in the negative because of the overdraft charges I was told wouldn’t be used on me.
They will remove the fee if you go in there in person and raise hell. I’ve done it many times.
